HEATHROW, Fla., and BOSTON -- Gasoline prices are on the rise thanks to a big deal to tighten supply.
Just a couple weeks after members and key nonmembers of the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut their cumulative production by 1.2 million barrels per day (bpd) starting January 2017, crude prices hit an 18-month high. Gasoline prices have quickly followed: According to AAA, Heathrow, Fla., the national retail average had risen 14 days in a row after the Nov. 30 OPEC agreement, reaching $2.21 per gallon on Dec. 12. This is 3 cents per gallon (CPG) higher than a week ago, and up 2 CPG from last month. Year over year, the national retail average was up 20 CPG.
On the state level, the largest weekly increases in retail averages were led by Michigan, up 9 CPG to $2.30 per gallon, Indiana (9 CPG) and Hawaii (7 CPG).
On a month-over-month basis, the Midwest has had some of the biggest increases in retail prices, with Michigan up 19 CPG, followed by Ohio (18 CPG), Indiana (18 CPG) and Illinois (12 CPG). AAA attributes the increases to a combination of rising oil prices and planned maintenance in November at the region’s largest refinery, BP’s Whiting, Ind., facility.
However, retail prices have trended downward week over week in 10 states, according to Boston-based GasBuddy. They include Utah (-5 CPG), Idaho (-3 CPG), Nevada (-2 CPG) and Arizona, Oklahoma, Washington and California, all down 1 CPG.
Only Nevada and Montana had retail averages lower year over year, down 8 and 1 CPG, respectively. And four states’ retail averages remained below $2 per gallon: Oklahoma ($1.94), Arkansas and Missouri ($1.97) and Texas ($1.98).
The highest averages were in Hawaii ($2.93), California ($2.66) and Washington ($2.58).
With oil prices up 25% from a month ago, retail prices are likely to continue to trend upward, especially since key nonmembers of OPEC, including Russia, have also agreed to production cuts.
“The current news and trends bode poorly for motorists who’ve gone back to driving larger cars over the last two years, and 2017 will likely see higher prices than where we stand today,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.
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