OPEC decision could reverse downward trend in gas prices
Prices at the pump dipped again in the last week, but a much-anticipated meeting of oil-producing countries Thursday could push prices higher heading into the New Year and beyond.
Drivers in all 50 states saw the price of a gallon of unleaded drop last week, with the national average down about 3 cents to $2.50 by late Tuesday morning. Prices will to continue to fall for the next few weeks, experts say, as demand eases following the Thanksgiving travel period.
What happens after that will depend, in large part, on the outcome of Thursday’s meeting in Vienna, when OPEC and other major exporters will decide whether to extend an agreement to reduce oil production through 2018. The current policy, which is set to expire in March, has reduced the supply of crude around the world, pushing the price of a barrel to nearly $60, the highest since 2015.
Patrick DeHaan, head of petroleum analysis for GasBuddy, said extending the production cuts will “nearly certainly” lead to higher gas prices in 2018.
“Global oil inventories have already tightened noticeably in the last year,” DeHaan said, “and continuing such in the face of rising demand may spur oil prices even higher in the days, weeks and months ahead.”
Jeanette Casselano, a spokesperson for AAA, said prices are likely to remain steady or decline through December. But that’s small relief compared to 2016, when gas was nearly 40 cents cheaper per gallon at year’s end.
Casselano said reduced demand and the switch to cheaper winter blends contribute to lower year-end gas prices. But those factors were muted by circumstances that contributed to an unusually volatile year for the market.
“This year, the typical factors that drive gas prices down in winter were outweighed by the impact of two major hurricanes, steady consumer demand and continued growth in gasoline exports,” she said. “Motorists will see higher than expected December gas prices – especially compared to year-end prices from 2015 and 2016.”