November 30, 2023
Gas prices are down – in every single state in this country.
That’s not an opinion – that’s a fact. I’ll show you the numbers in a second.
But today the very powerful group of oil producing countries made a decision that could send those gas prices back up.
Before I tell you about that decision – let’s just look at gas prices in this country today.
According to AAA the average cost in the United States for a gallon of regular is $3.25 that’s the same as it was yesterday, but down from a week ago, down from a month ago and down by 25 cents a gallon from a year ago.
Almost half of the country is looking at gas prices right around or below $3 a gallon. You can see all the states with average gas prices under $3.10 are in light blue and states with average gas prices well below $3 a gallon in dark blue.
The states in pink and red have average gas prices over $3.24 and the state with the most expensive gas is still California where the average cost for a gallon of regular is $4.85.
But here’s the thing – the amount of money you pay for gas at the pump – depends a lot on two things — supply and demand for oil. Right now the demand is low as opposed to for example the summer when families were driving around on their summer road trips.
But it’s the supply part of that equation that will be impacted by the decision I talked about at the beginning of this video. A decision made today at a meeting of OPEC+. In case you don’t know OPEC+ is the group of oil producing countries lead by Saudi Arabia and includes countries like Russia, the UAE and Iraq. The United States is not a member. Now –as I have told you in several videos in the past — oil is a global commodity – disruptions or volatility in one part of the world – can impact oil prices all over the world. And the goal of OPEC+ is to squeeze as much money out of the world for their oil as they can so — duh they make more money for themselves.
Well – here’s the thing – these OPEC+ countries haven’t been getting as much money for their oil recently, demand has been down and supply has been steady. In fact – as I told you in this video in the month of October – the United States pumped more oil in this country than in any other point in history. 13.2 million barrels of oil a day. So to offset that supply – for the last year or so OPEC+ has been significantly cutting the number of barrels of oil they produce every day.
In the spring and summer it worked – you can see in this chart that shows you oil prices since December of 2018 — oil prices in the united states peaked in march when the price for a barrel of oil was almost $124– the price remained steady over the summer. But then dropped. And as of today – it’s down, well below $80 a barrel.
So OPEC+ had a decision to make today – let the oil production cuts expire at the end of 2023, go back to regular production loads and see what happens with the market and keep their oil dominance or extend those cuts into 2024.
I’ll let you guess which one they decided.
Yeah – they decided to keep up with the production cuts. Now – what’s different this time is they decided that each OPEC+ member nation could individually decide how much oil it produces and sends to the global market instead of coming up with a mandatory production cut for every OPEC+ nation.
Saudi Arabia which is OPEC+’s defacto leader and Russia immediately announced they would be extending their voluntary oil production cuts into the first three months of 2024. In all – OPEC+ member nations agreed to voluntarily cut more than 2 million barrels of oil per day in the first quarter of 2024.
Depending on if the United States can keep up the incredible oil production we saw in October – this decision by OPEC+ could strain the supply of oil on the global market – and very well could drive up the price of gasoline.
Read the announcement from OPEC+ here.
