OPEC Production Rates Keeping Gas Prices Down

After a steady rise during May, the average price for regular unleaded gasoline across the U.S. remained steady in June with the summer driving season now under way. The average price for gasoline continues to hover near at what many expect to be the highest average of the year of $2.75 per gallon, according to AAA’s Gas Gauge Survey.

While pump prices across the country have increased since April, consumers are saving 90 cents per gallon compared to this same date last year. Meanwhile, the Organization of Petroleum Exporting Countries, or OPEC, announced last week it does not plan to reduce production and expects to continue producing at current levels.

Oil analysts are saying American oil producers are continuing to pump substantial amounts of petroleum despite the decline in prices over the past year.

AAA estimated that gasoline prices are poised for a seasonal decline given major refineries generally have completed their seasonal maintenance by this time of year and are preparing to increase production for the summer driving season.

In addition, the cost of crude oil is unlikely to rise significantly in the near term given that OPEC decided not to cut production at its most recent meeting. Nevertheless, a number of factors could cause prices to inch higher during the summer driving season, such as geopolitical issues in the Middle East, unexpected problems at major refineries or a major hurricane that disrupts production, refining, and distribution.

Back to NAFA Connection