Gasoline prices are likely going to surge again following the surprise announcement on Monday that many oil-rich nations were planning on reducing oil production going forward.
On Monday, the Organization of the Petroleum Exporting Countries (OPEC) announced that they plan to reduce oil drilling by approximately 1.16 million barrels per day. OPEC members, led by Saudi Arabia and other Middle Eastern countries – including Iraq, the United Arab Emirates, and Kuwait – are going to cut down on their energy production.
Phil Flynn, a senior market analyst with Price Futures Group, recently told Fox Business during an interview that for those in disbelief that gas prices would hit $4 a gallon, he would urge them to reconsider. He added further that whether they reached $5 or not will depend on a variety of different things.
He said that this decision came at a terrible time, as refiners were just starting to kick “into high gear to produce summer blends of gasoline.” With the supply of oil being lower, they will have a harder time with the process, and the prices of each barrel will be driven up. Flynn also pointed out that when petroleum refiners switch to summer blends – which limit certain emissions that tend to increase in warmer weather – the price of gasoline tends to increase by around 10 to 15 cents per gallon nationwide. With the OPEC cuts, that amount may be even higher.