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OPEC Production Rates Keeping Gas Prices Down

Group has no plans to change oil output.

by on Jun.10, 2015

AAA says gas prices are expected to remain below $3 a gallon on average for some time.

After a steady rise during May, the average price for regular unleaded gasoline across the U.S. remains steady in June with the summer driving season now under way.

The average price for gasoline continues to hover near at what many expect to be the highest average of the year of $2.75 per gallon, which is fractions of a penny higher than a week ago and is nine cents per gallon higher than one month ago, according to AAA’s Gas Gauge Survey.

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While pump prices across the country have increased since April, consumers are saving 90 cents per gallon compared to this same date last year. Meanwhile, the Organization of Petroleum Exporting Countries, or OPEC, announced last week it does not plan to reduce production and expects to continue producing at current levels.

Oil is now trading at roughly $63 per barrel and analysts are saying American oil producers are continuing to pump substantial amounts of petroleum despite the decline in prices over the past year.

AAA estimated that gasoline prices are poised for a seasonal decline given major refineries generally have completed their seasonal maintenance by this time of year and are preparing to increase production for the summer driving season.

In addition, the cost of crude oil is unlikely to rise significantly in the near term given that OPEC decided not to cut production at its most recent meeting. Nevertheless, a number of factors could cause prices to inch higher during the summer driving season, such as geopolitical issues in the Middle East, unexpected problems at major refineries or a major hurricane that disrupts production, refining and distribution.

Pump prices in the Midwest recently surged due to a series of a refinery issues in the region that have limited production. According to the U.S. Energy Information Administration, gasoline production in the Midwest during the most recent week fell to its lowest levels since late March. Meanwhile, prices on the West Coast are stabilizing due to a surge in imports that have helped to offset supply issues stemming from refinery problems, according to AAA.

(Summer travel likely to increase as gas prices fall. For more, Click Here.)

AAA reported California, with an average price of $3.61 per gallon remains the nation’s most expensive market for retail gasoline. A total of seven states, all located in the Western United States, have averages above $3 per gallon, including Alaska, Hawaii, Nevada, Washington, Utah and Oregon. The nation’s least expensive markets for retail gasoline are South Carolina at $2.45 per gallon, Mississippi and Arkansas, AAA reported.

(Click Here for details about why New York is the best state for teen drivers.)

Week-over-week prices have been relatively stable, moving just +/- 3 cents in 31 states. Consumers in 37 states and Washington, D.C. are paying more at the pump compared with one week ago, with averages in eight states reflecting increases of a nickel or more per gallon, AAA said.

(To see more about states cracking down on left lane hogs, Click Here.)

The largest increases in price over this period were in Minnesota where gasoline went up 8 cents per gallon, Alaska and Montana where gas went 7 cents per gallon. But prices moved lower in 13 states with the largest savings in the price at the pump were in Indiana where gasoline dropped by 10 cents per gallon, Ohio and California where gasoline dropped by 9 cents per gallon on average, according to the AAA surveys.

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One Response to “OPEC Production Rates Keeping Gas Prices Down”

  1. gt101 says:

    You can bet the pump price will continue to rise even with excess supply.