The national average for a gallon of gasoline has begun to move higher, due in large part to an agreement amongst OPEC members to cut back on oil production. Prices in the U.S. average $2.18 per gallon today, 6 cents higher than a week ago and 14 cents higher than last year, with average prices rising in 37 states over the last week.
The move comes as oil prices skyrocketed back over $50 per barrel last week—after struggling to maintain $43 per barrel over the two weeks prior—thanks to a somewhat surprising decision from OPEC countries to cut oil output by 1.2 million barrels per day. This is a larger cut than expected, and surprising in that many analysts believed OPEC wouldn’t come to such a decision. The impact at the pump has been somewhat limited thus far, but motorists should expect to see gasoline prices moving higher nearly countrywide.
Indeed, attitudes among OPEC members continue to vary widely—from Indonesia, which is no longer an OPEC member, to Saudi Arabia, the cartel’s largest producer and who looks to be impacted the most. While the cuts don’t take effect until January, market traders clearly believed that OPEC would match talk with action by then.
“If I had a nickel for every time OPEC said it was going to cut oil production, I could probably buy everyone free gas on Christmas,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.
“While OPEC signaled at its meeting in Vienna that it would cut crude oil production, it also created a committee to monitor the reduced production quotas; this is to address cheating, which is an issue that has been pervasive for the organization. For now, oil markets have bid up oil prices in a fury believing the agreement—which comes into force in January—is exactly what’s needed to balance supply and demand. I, however, believe this rally represents a balloon that’s filled with too much air and risks a correction (i.e. popping the balloon) that may be seen in due time.”
States that saw the largest weekly jump at the pump:
- Kentucky: 14 cents
- Ohio: 14 cents
- Michigan: 13 cents
- Delaware: 12 cents
- Illinois: 11 cents
In total, nearly ten states saw prices rise a dime or more in the past week, while 25 saw a rise of a nickel or more.
Just 13 states saw declines, led by:
- Idaho: 6 cents
- Utah: 5 cents
- Wyoming: 5 cents
- Alaska: 3 cents
- Nevada: 2 cents
While eleven states are currently seeing average gas prices under $2 per gallon, expect the number to be cut by at least in half this week.
The nation’s cheapest states were:
- Arkansas: $1.94
- Oklahoma: $1.95
- Texas: $1.95
While the most expensive fuel was found in:
- Hawaii: $2.84
- California: $2.67
- Washington: $2.59
All but five states now have higher gasoline prices than a year ago, with the exceptions being:
- Nevada: 10 cents lower
- Wyoming: 8 cents lower
- Montana: 6 cents lower
- California: 2 cents lower
- North Dakota: 1 cent lower
“As I wait for the oil price balloon to burst, the rally in oil prices will lead to higher gasoline prices in much of the country over the next weeks. From the east to the west, average prices could rise 5-15 cents per gallon in the week ahead, so motorists in nearly all communities should plan accordingly. OPEC seems to be taking the role of the Grinch this holiday season; the era of low oil prices may be over for now,” DeHaan said.