Justin Sullivan—Getty Images
After three months of declines in U.S. gasoline prices, Americans should brace for costs to rise again soon.
On Wednesday, regular gasoline was going for an average of $3.83 across the country, according to auto club AAA, up five cents from last week and the first time prices have gone up in more than three months. And that was before OPEC+, a global coalition of oil-producing nations, announced it would begin cutting oil output next month.
Prices rose by a further three cents on Thursday in the wake of the news, and it’s starting to look like it won’t stop there.
Demand for gasoline is rising, and global supply is set to remain limited after the OPEC+ decision, meaning higher prices. And while price increases over the past week have been relatively slow and steady, cutbacks in global oil production around the world could herald a much faster and more dramatic rise.
Why prices have increased so far
The average price of gasoline exceeded $5 a gallon for the first time ever last June—California has seen it surpass $6—as global oil shocks reverberated from Russia’s invasion of Ukraine.
Russia is the third largest petroleum producer worldwide, and while it exported relatively small amounts of oil to the U.S., the disruption caused by the war scrambled global oil markets and sent prices soaring.
Prices began coming back down to earth in July as demand receded and more supply came into the market in part from the U.S. strategic oil reserves, which President Biden had authorized to tap for up to 1 million barrels of oil per day back in March.
But that trend may be starting to reverse itself, with demand for gas beginning to tick upwards nationwide in recent weeks, according to AAA, while supply remains uncertain.
Oil supply in the U.S. has been hit by an unexpected series of accidents and maintenance work at refineries around the country. A fire and explosion at a BP plant in Ohio last month caused the deaths of two workers and indefinitely shut down operations, and the plant could potentially stay offline for months, the Toledo Blade reported, sending prices rising in the Midwest.
On the West Coast, “a string of planned and unplanned refinery maintenance issues has severely tightened fuel supply in California,” Doug Shupe of the Automobile Club of Southern California told the Times of San Diego last week. The maintenance work has sent gasoline prices soaring from California to Washington State in recent weeks.
Gradual releases from the U.S. strategic oil reserve have helped calm the market, but that can’t go on forever. The reserve now holds 416 million barrels of oil, down from 560 million in April and its lowest level since 1984. The Biden administration had planned on halting releases in October.
But with the latest news from OPEC+ and other threats to global oil supply, the country may just have to keep tapping those strategic reserves.
Why prices could keep rising
Wednesday’s decision from the OPEC+ coalition—which includes Russia and 23 other oil-producing nations—could become the latest threat to stable global oil supply.
The coalition announced that it would cut its collective output limit by 2 million barrels a day starting from November as the group seeks to keep global oil prices at a high level. Biden was quick to criticize the move, calling it “unnecessary.”
Brent crude oil futures were already up over 3% between the OPEC+ announcement and Thursday.
For Biden, high gasoline prices could become a political sticking point with midterm elections approaching next month. U.S. national security adviser Jake Sullivan said that Biden was “disappointed” by the outcome and that the administration was exploring different avenues to keep gasoline prices as low as possible, including continuing to release supply from the strategic reserve.
The White House and the Energy Department may also be considering a ban on all U.S. gasoline exports to shore up domestic supply, Bloomberg reported on Tuesday, although experts have noted that this plan could backfire by creating more disruption in global energy markets, especially in allied European countries dealing with a mounting energy crisis.
Oil prices could also spike when Europe implements a planned ban on Russian petroleum imports starting from December, according to Treasury Secretary Janet Yellen, who warned last month that Europe’s ban carries “a risk” for global crude oil prices.
This story was originally featured on Fortune.com
Explainer-Why are U.S. fuel prices rising again? Will they keep going up?
U.S. gasoline prices have been rising again, and many worry that costs at the pump will go up further after OPEC and its allies said Wednesday the group known as OPEC+ would cut its production target. U.S. gasoline prices skyrocketed early this year due to high demand and tight global refining supplies, but they began to fall after peaking in June. Now, the national average is up 20 cents from its mid-September lows of $3.67 a gallon, largely driven by gains in the Midwest and West Coast, according to the American Automobile Association.
Oil prices rise 1% on cuts to OPEC+ output targets
NEW YORK (Reuters) -Oil prices rose about 1% on Thursday, holding at three-week highs after OPEC+ agreed to tighten global supply with a deal to cut production targets by 2 million barrels per day (bpd), the producers’ largest reduction since 2020. The agreement between the Organization of Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, comes ahead of a European Union embargo on Russian oil and would squeeze supplies in an already tight market, adding to inflation. “We believe that the price impact of the announced measures will be significant,” said Jorge Leon, senior vice president at Rystad Energy.
Binance suspends BNB blockchain on potential exploit; Peckshield reports US$572 mln hack
The BNB Chain — the blockchain operated by the world’s largest crypto exchange, Binance Global inc. — has suspended operation as developers have identified a potential exploit on the network, according to an official Binance Twitter account. See related article: Chainalysis says $2 bln stolen in cross-chain bridge hacks this year, more expected Fast facts […]
Deaths linked to Ian keep rising in Florida as the Keys reported its first fatalities
There are now 89 deaths across 14 counties attributed to Hurricane Ian, the Florida Medical Examiners Commission said Wednesday, as the Keys reported the first fatalities there after a boat carrying nearly two dozen “suspected” migrants succumbed last week to the storm’s mighty waves.
Could This Roth IRA Alternative Help You Save for Retirement?
Brokerage accounts and individual retirement accounts (IRAs) offer two very different ways to invest. A Roth IRA, for example, can offer the advantage of tax-free distributions in retirement while a brokerage account doesn’t cap annual contributions. You might choose to … Continue reading → The post Brokerage Account vs. Roth IRA appeared first on SmartAsset Blog.
Top Growth Stocks for October 2022
Growth investing is one of two main fundamental investment strategies, the other being value investing. Investors employing a growth investing strategy will typically place the majority of their portfolio in growth stocks, which are shares of companies with earnings or sales expected to grow at a significantly faster rate than the rest of the market will. The primary way that investors expect to earn profits from growth investing is through capital gains.
Biden hails IBM’s $20 billion New York manufacturing deal
POUGHKEEPSIE, N.Y. (Reuters) -President Joe Biden on Thursday championed his administration’s push to subsidize U.S. semiconductor chip manufacturing and boost blue-collar jobs at a visit to an IBM Corp facility in New York. IBM plans to invest $20 billion in New York’s Hudson Valley region, once a manufacturing powerhouse, over the next decade to make and develop semiconductors, mainframe technology, artificial intelligence and quantum computing. “Where is it written that we can’t lead manufacturing in the world?” Biden said.
Will working while receiving Social Security increase my benefit?
Earnings prior to that year, when indexed, may be higher than your current income — everyone’s earnings record is different, naturally. Read: When should you file for Social Security? By continuing to work, each year your income will be added to your lifetime earnings summary.
OPEC’s oil cuts force the US to reconsider its foreign policy
OPEC+ announced it’ll slash output by 2 million barrels per day (bpd) on Wednesday (Oct. 5), the biggest cut since the pandemic started in 2020. The White House’s reaction was swift, calling the decision “shortsighted” and accusing the oil cartel of “aligning with Russia.”
3 ETFs to Invest Globally in Q4 2022
Globally focused exchange-traded funds (ETFs) provide a straightforward way to geographically diversify a portfolio. The global economy contracted in 2020 due to the impact of the COVID-19 pandemic. While it began to recover in 2021, growing an estimated 6.
Exclusive-Indian car makers propose tax cut on imports in trade deal with Britain
Indian car makers have proposed cutting to 30% the tax rate on imported cars as part of a trade deal with Britain, sources told Reuters, an unprecedented move that could ease access to one of the world’s most protected automobile markets. It is the first time Indian car makers have backed such cuts, caving to pressure from a government that wants them to give up their protectionist position and lower entry barriers, sources with direct knowledge of the matter said. Lobby group the Society of Indian Automobile Manufacturers (SIAM) has written to the government backing phased cuts to 30% over five years, following a grace period of five years with none, three sources said, speaking on condition of anonymity.
Retirement: What Happens If a Spouse Dies?
“Retirement accounts with ill-conceived beneficiary designations could potentially cost your family tens of thousands or even hundreds of thousands of dollars if done wrong,” according to Dan Stewart, president of Revere Asset Management. For 401(k) plans and other pension plans, federal law requires a spouse as the primary beneficiary, and choosing any other beneficiaries for those plans requires spousal waiver and consent. Determining primary and contingent beneficiaries is an integral part of estate planning.