With Saudi Arabia talking of slowing oil production and pundits sounding the alarm on an oil tax increase in the Inflation Reduction Act, prices at the pump could very well be on the rise again following a welcomed decline.
Fuel prices have been trending downward with the national average price for regular gas dropping 12.6% month over month to $3.89 Tuesday, according to AAA, while diesel fell 9.3% to $4.97.
However, tough news in the overseas oil market and in the U.S. has some analysts warning that falling prices may be short-lived.
Saudi Arabia announced this week that it and other OPEC+ member nations may squeeze oil production given market volatility, according to Bloomberg. The news drove up the price of Brent crude 1.1% to $97.53 a barrel on Tuesday.
U.S. Oil and Gas Association President Tim Stewart told CCJ that "very few OPEC+ members (the plus being Russia of course) have any room to dramatically increase production. The capacity to cut is certainly there. The impact of course would be a jump back over $100 a barrel assuming we don’t fall off the global recession cliff in the next 90 days."
Stewart added that OPEC+ influence on the U.S. oil market has gained momentum under the Biden administration.
"The sad thing for Americans is it was just two years ago when the shale producers had OPEC+ on its heels," Steward said. "They were responding to our production numbers and instituted a global price war to put our shale producers out of business. For a long period – we didn’t care what OPEC+ was doing because we had achieved production numbers that made us largely independent of global price shocks. The pandemic and politics changed that."
