October 14, 2023
Let’s talk about gas prices in the US. Believe it or not they’re down. But I’m about to talk to you about some of the big factors that may play into those prices possibly going up in the coming days and weeks. Including what’s happening between Israel and Hamas. Now this is a warning – you’re going to want to pull up a chair and have a seat – because this is a deep dive video. So if you don’t have time to watch it now – favorite it and come back to it when you have a few minutes…
Let’s first look at the simple gas price numbers.
The national average for a gallon of regular gas in this country as of yesterday was $3.63 cents. The fact is overall that’s down. It’s down from the day before. It’s down from a week ago, it’s down from a month ago and it’s down from a year ago.
As I have explained before – just because $3.63 is the national average for a gallon of regular doesn’t mean that’s the price at your local gas station. An average is a mathematical equation for every gas price at ever gas station in the country.
The price you’re paying depends on where you live. You can see the people in the south and plains are actually paying much less than $3.63 – and the people in the west are playing much more. Especially in California where people are paying an average of $5.67 cents for a gallon of regular.
Ok – now that we have that clear. Let’s talk about some of the big factors that are playing into gas and oil prices. You have to understand – some of these factors are real and other factors are perceived. It’s also important to understand when oil prices go up – sometimes there’s a bit of a lag before gas prices go up and on the flip side, once gas prices are up and oil prices go down, it usually takes much longer for gas prices to go down. I don’t make the rules… I know it’s not fair. That’s just how the market works.
Ok let’s talk about some of these perceived factors that could be playing into your gas prices in the near future. One of the big ones is what is happening right now between Israel and Hamas. The fact as of yesterday– the price for a barrel of oil increased more than 4% to more than$ 85 a barrel. Experts say the main reason for that increase is the perceived concern that the war could spill over into the wider oil-rich areas in the middle east. The fact is – Israel and Palestine are not major oil producing countries. But – there is a perception – that the war would spill over into nearby Saudi Arabia, Iran or Iraq which *are* major oil producing countries. And if their productions are disrupted for any reason that would disrupt the global oil supply. And as I always say – because oil is a global commodity – disruptions in one part of the world affect prices all over the world. But that war spill over is hypothetical. That’s not happening right now – the war is contained – yet oil investors are a jumpy group – for lack of a better word – and just the perceived threat is enough to drive up oil prices.
Another perceived fear that has not yet become a reality – is the fear that the United States would further sanction Iran for its complicity and support of Hamas by cracking down on Iran’s oil exports. And if that happens – we could see a major disruption to the global oil supply. And again that makes oil investors jumpy.
Now let’s talk about the real factors that are impacting the oil prices and then trickling down to your gas prices.
First – as I reported at the beginning of this video, gas prices have been going down in the US. That for several reasons – but mostly – because of the time of year. Every year around this time we typically see gas prices go down because the summer driving season is over. Demand for gasoline starts to go down and states switch over to the winter blend of gas which is less expensive.
But one of the real factors that’s actually preventing gas prices from dropping even more are the decisions of OPEC+. OPEC+ which is the cartel of oil producing countries – of which the US is *not* a member – has significantly cut oil production since last year. We’re talking – more than 1 million barrels of oil per day have been removed from the supply line. Why? Because those countries want to make more money. When there’s less supply, they get more money for less oil. And just a few weeks ago OPEC+ decided not to increase oil production but instead to keep these significant cuts in place for at least the rest of 2023.
Another real factor is Russia. Russia is a very powerful member of OPEC+ and with the US and our allies sanctioning their oil exports because of the war with Ukraine – that is absolutely disrupting the global oil supply.
And that leads me to the United States. Now – before you start commenting “drill baby drill” or “we should pump more oil in our country” you should know the facts. We. Are. In fact – we just hit a 40-year record high for the amount of crude oil produced in this country.
For the week ending on October 6th – the United States produced 13,200,000 barrels of oil per day. Let me say that again, 13,200,000 barrels of oil per day. That is more oil being produced in the United States than at any other point in the last 40 years. The second highest production was the week of march 13 2020 when we produced 13.1 million barrels a day.
The issue is – yeah we’re pumping all this crude oil now, but you can’t put crude oil into your car’s gas tank. It has to be refined. And according to the latest report for the same week ending on October 6th, the capacity of our refineries in this country to turn that crude into gasoline was only at about 86%.
So – if you’re still with me – first – thanks for still watching. Second, you should leave this emoji in the comment section so I can see that you watched till the end. And third it’s always important to remember with gas prices there is never an easy answer. It’s complicated. And anyone who tells you there’s one solution, or one person at fault, or one reason why gas prices are going up or down – has no idea what they’re talking about. But since you made it this far — at least now – you understand some of the main factors that are going into what’s happening today. Tomorrow could be different.
US weekly oil production report here
Oil refining capacity report here
AAA gas prices here
Crude oil prices here
