Gas prices are down, but action overseas could change that soon
WASHINGTON — Gasoline prices have been on a roller coaster ride across the United States this year.
After record high prices in the summer, we are seeing a drop in prices in most countries this fall.
However, economists are bracing for another hike soon after Saudi Arabia and other countries decided to cut oil production each day.
CHANGE OF TREND
To understand the current price at the pump, it helps to look back a few months.
According to the Energy Information Administration, in January the price was $3.32 per gallon.
In April, it was $4.11 per gallon.
July was $4.56 per gallon.
However, some relief came later.
Last month, the national average was $3.70.
Prices fell in most places across the United States during October as well.
MEETING OF THE BOARD OF DIRECTORS
Then the Organization of Petroleum Exporting Countries – OPEC – decided to meet.
OPEC and OPEC Plus represent more than 20 oil exporting countries around the world.
The US is not a member.
However, together they control about 50% of all oil production worldwide.
Earlier this month, OPEC+ voted to cut oil production by 2 million barrels per day.
This is important because the world consumes about 100 million barrels every 24 hours.
The withdrawal of 2 million is expected to push prices higher as oil prices are based on the global market.
CAN DC DO ANYTHING?
“Choices made by other countries affect the price of gas here,” President Biden said last week from the White House.
OPEC’s decision is one of the reasons why last week President Biden announced the release of about 15 million barrels from our nation’s emergency oil reserves.
While that’s a lot, it’s only about two weeks of production expected to be lost.
That’s why some in Washington are asking whether anything can be done to punish Saudi Arabia, a prominent OPEC leader that voted to cut production, to change its mind.
After all, one of the reasons President Biden went to Saudi Arabia earlier this year was to prevent such decisions.
However, any punishment or action against Saudi Arabia is difficult.
Support is growing on Capitol Hill for the bill, known as the NOPEC, allowing the Justice Department to sue Saudi Arabia and other countries for unfair energy practices.
Voting may take place after the midterm elections.
Other lawmakers want the U.S. to immediately block the sale of weapons and military equipment to Saudi Arabia.
Some meetings in the Persian Gulf between the US and Saudi Arabia have already been canceled.
However, the move is causing more controversy with Republican Sen. Jody Ernst of Iowa recently wrote to the White House that cutting such ties “helps our adversaries” such as Iran.
While Saudi Arabia may be going against the White House on energy issues right now, they often align on keeping the peace in the Middle East.
Should Saudi Arabia be ostracized from the United States entirely?
One thing is clear, expect something soon.
President Biden himself promised “consequences” for Saudi Arabia’s actions.
At this point, it is unclear whether anything will change the expected surge in the coming weeks.