OPEC cutback already affecting gas prices in Kentucky
Published 9:49 am Friday, April 7, 2023
The announcement last weekend by the Organization of Petroleum Exporting Countries (OPEC) that they would cut their crude oil exports has already caused the price at the pump to jump in Kentucky.
According to Kiplinger.com, the move will take about 500,000 barrels per day of production off the market and comes on top of similar cutbacks OPEC and its allies have made in recent months. Oil prices shot higher on the news, with benchmark West Texas Intermediate crude, or WTI, spiking to $80 per barrel. Just a couple of weeks ago, WTI was trading in the $60s, dragged down by turmoil in financial markets.
While gas prices jumped about 10 days ago, they had leveled off for several days, prior to the OPEC announcement.
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The cut means Kentucky’s average price per gallon of regular has risen to $3.34 per gallon, as of Thursday afternoon. That is a three-cent increase from Wednesday, a nickel more than a week ago, and 28 cents per gallon higher than one month ago. However, it is still 58 cents less than last year at this time. These prices come from GasBuddy.com, a crowd-sourced website and mobile app that tracks gas prices across the country.
Kiplinger notes that OPEC appears concerned about oil demand taking a hit in the United States and other Western nations later this year, as higher interest rates weigh on economic growth and a possible banking crisis makes financial markets jittery. But for now, demand appears to be solid, so the reduced output is likely to push oil prices higher.
The prediction by Kiplinger is to look for WTI to trade between $75 and $85 per barrel this spring, and possibly spike even higher if any further disruptions to supply hit the market. Higher crude prices, along with the usual springtime increase in demand due to travel, will combine to drive the price at the pump even higher.
Unlike oil, natural gas prices have remained well below last year, and with a relatively mild winter and early spring in the U.S., that is unlikely to change, until summer causes increased electricity demand as air conditioner use goes up.