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Gas prices show some increase with OPEC decision
By Kalea Hall
YOUNGSTOWN
From a hurricane to OPEC, there are several factors that impact what you pay at the pump.
If Hurricane Matthew were to hit the Gulf of Mexico, the impact on the gas supply would be big.
It probably would shut down the oil supply and disrupt the flow of oil to the refineries.
Gas would be scarce nationwide.
“It’s just a nightmare with what a hurricane can do,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.
But on Wednesday, the National Weather Service showed Matthew’s path heading up the Atlantic Florida coast, the Georgia coast and the Carolinas. Florida Gov. Rick Scott told residents to be prepared for a direct hit from Matthew, and several areas along the coast were evacuated.
With no threat to the Gulf, there would be no threat to national gas prices, but the states affected by the hurricane would see the impact.
The gas prices have already seen an increase after OPEC said last week it would reduce production to between 32.5 million and 33 million barrels a day from current output of 33.2 million at the end of the year. The deal to decrease production and the oversupply in the market will not be finalized until OPEC meets again in November.
“There’s a bit of skepticism right now whether or not they will follow [through],” DeHaan said.
The U.S. Energy Information Administration had the benchmark West Texas Intermediate crude oil price of $48.69 per barrel up $4.02 from a week earlier and $2.43 up from a year earlier.
Oil prices started to tank in 2014 after OPEC decided not to cut production and pump out oil at high volumes instead. In June 2014, oil prices were more than $100 per barrel.
The drop in oil prices led Ohio’s gas exploration to come mostly to a halt. The new drilling is focused in counties where there’s dry gas like Belmont, Monroe and Jefferson.
“We are cautiously optimistic,” said Shawn Bennett, Ohio Oil and Gas Association executive vice president.
If the cutback in production does take place, then U.S. producers will have to wait and see how the markets react.
“A curtail in production is a good initial first step,” Bennett said. “You have to wait and see if they are actually making good on their promises.”
Northeast Ohio gas prices saw an increase this week, hovering at $2.21 a gallon, according to AAA East Central’s Fuel Gauge report. The average price last week was $2.08, and this time last year was $2.35.