Gas prices have already jumped after OPEC agreed to cut oil production worldwide by more than a million barrels a day beginning January 1.
After the agreement was announced Wednesday, markets reacted quickly, and crude oil prices increased by almost 10 percent.
“An increase in the price at the pump could literally happen overnight,” says Ken Grant, manager of Public and Government Affairs for AAA Mid-Atlantic. “Crude oil closed more than $4 higher Wednesday than it did on Tuesday. Retail gas prices are directly related, meaning prices at the pump could go up between 5-10 cents a gallon as a result.”
The price jumps irritate motorists, but help offset even larger spikes that would otherwise occur.
OPEC decided to cut oil production in an effort to rebalance the oil market as a result of the glut in the global oil supply that has pressured oil prices lower the last few years.
According to AAA, the national average for a gallon of regular gas today is at $2.16, up slightly over the last few days after dropping for weeks.
The Gas Buddy website reported prices as low as $1.97 a gallon at two BJ’s locations in northern New Castle County. Gas prices are also available from AAA by clicking here.
In Delaware, the average price for a gallon of regular unleaded is at $2.16, which is up two cents overnight. As usual, gas prices with Wilmington’s gas average at $2.15, Bear’s average at $2.20 and Dover’s average at $2.16.
Bear convenience store/stations saw a jump of seven cents a gallon, even before the OPEC deal was formally announced. The area has few independent stations that tend to hold prices down.
Gas prices in Delaware are now nearly a nickel higher than during the same period a year ago. The state’s gas price is also close to the national average. Gas prices are often below the national number.
Prior to the agreement, there was speculation that the retail price of gas could drop below $2 by year’s end.
Although demand remains relatively flat and inventories have grown over the past three weeks, the path back to the $2.00 mark may take a while longer, AAA Mid-Atlantic reported.
The agreement is slated to last six months. OPEC plans to meet again on May 25, 2017, and will discuss the possibility of an extension at that time.
There is speculation that OPEC members might not stick to the production target. Also, any sharp rise in crude oil prices could spur production in the U.S., which is less dependent on foreign supplies thanks to recent oil discoveries.
OPEC production leader Saudi Arabia is said to be willing to see only a modest increase in crude oil prices, due to the risk of losing market share in the U.S.
