Once upon a time, rising gas prices meant money flowing from Americans to foreign countries.
We are not only faced with rising gas prices at the pump, but those prices are going to continue into the summer.
Maybe, but I doubt it.
Of course, if something like a war happens, that could keep prices up. But the people predicting rising gas prices are basing their guess on the decision of the OPEC nations and Russia to cut energy prices.
OPEC nations did this in the seventies causing the “oil crisis.” Rather than allow fuel prices to rise, Jimmy Carter led the government in imposing limits. Instead of people buying less gasoline, service stations ran out of fuel. Then they imposed limits on how much gasoline each person could purchase at one time. Instead of dealing with higher prices, Americans had to deal with time-consuming lines of cars getting gas, and more frequent fueling since they could never fill their tanks.
And OPEC never stopped their pruduction quotas. Why should they have? They were getting their money.
Ronald Reagan ended price controls and, not too long after that, OPEC had to end their quotas.
Because each cartel member gets more tempted to cheat on the other members and make some money by secretly producing more oil. Before too long, the production quota is only a fiction and the price starts dropping.
Sooner or later, and probably sooner, that’s going to happen again as long as the government doesn’t impose price controls.
If the rising gas prices last awhile, that means that the American shale industry will capture more of the world market. Russia and OPEC nations are hurting themselves by this strategy.
The Wall Street Journal reports, “Americans Face Highest Pump Prices in Years.”
Americans are spending more at the pump than they have in years. Prices could rise even higher just as drivers hit the road for family vacations.
“This summer, in terms of average gas prices, will likely be the highest since 2014,” said Patrick DeHaan, petroleum analyst at GasBuddy, a fuel-tracking app. “There’s been very little question about that.”
Crude prices have jumped thanks to continuing production cuts by major exporters. […] According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week—the highest level since 2015.
While higher fuel prices could herald an end to the glut that has plagued the energy market since 2014, they also threaten to dampen demand and hit consumers in their pocketbooks.
Since the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, agreed to collectively limit output two years ago, U.S. oil futures have risen about 40%, closing at $62.06 a barrel on Friday. Gasoline futures are up 8.6% this year.
“What we’re seeing now at the pump is reflective of OPEC’s decision in 2016 to cut back on oil production,” said Mr. DeHaan.[…]
OPEC’s production cuts have helped offset growing output from U.S. shale, which has repeatedly reached new record weekly highs this year.
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