Written by Christian LeDuc, WCPO digital content producer
Gas prices are once again on the rise across the nation and unfortunately, that’s impacting our wallets here in the Tri-State.
Right now, many stations are inching ever closer to $4 a gallon. Although it’s seeming like a bit of deja vu from this summer, the reasons behind this spike are not exactly the same.
Earlier this year, gas prices were so high because the price of crude oil hit a record high mixed with an increase in summer travel demands. Now, crude oil is again to blame after The Organization of Petroleum Exporting Countries announced a production cutback of 100,000 barrels a day. This decision was made to protect the profits of oil-producing nations within the organization.
What is OPEC?
It was formed in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The developing country exporters wanted to assert control over their domestic production and global supply. At the time, the U.S. was the world’s leading crude oil producer and consumer.
Now, there are 13 countries, mostly African and Middle Eastern in the organization. According to its website, “any country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of member countries, may become a full member of the organization.”
According to Investopedia, strong U.S. consumption growth during the 1960s, coupled with a decline in domestic crude output throughout the 1970s, increased the market power of oil exporters in OPEC. Since the 1970s, U.S. politicians have frequently blamed OPEC for energy price increases.
The United States is not a part of OPEC and while the U.S. has its own production and supply of crude oil, because OPEC has such a significant pull on the overall market, when its prices increase or decrease, it creates a ripple effect.
Several U.S. refinery shutdowns have hurt the gasoline supply in recent weeks, including a BP refinery explosion in Toledo, Ohio that killed two workers and shut down operations, possibly into early next year.
The recent Hurricanes did not hurt supplies. Several oil rigs in the Gulf of Mexico were shut down for some time but are now reopening.
President Biden, meantime, has warned oil companies and stations not to raise prices to profit off the storm.
What does this mean for your wallet?
Unfortunately, prices will likely continue to rise. Hopefully, we will not see the extreme prices we saw earlier this summer. But all these complex economic and political issues across the globe impact what you are feeling every time you go to the pump.
It is a stark contrast from two years ago.
In March of 2020, as COVID-19 was shutting down everything, Cincinnati gas prices fell to $2.32, according to AAA. They dropped below $2 in the next couple of months, as drivers stayed off the road and oil companies had huge surpluses of gasoline.
To find the cheapest gas near you, check out our gas prices map here.