Gas prices continue to rise as holidays approach

Berks County motorists had to travel through some rough weather this past summer. However, when it comes to the price for a gallon of gasoline, they’re still in the middle of what’s proving to be a perfect storm for consumers.

Prices in Berks on Friday averaged $3.45 per gallon for regular, according to GasBuddy. That’s up 27 cents over the month and 95 cents over the year for the highest average in seven years.

The average passed $3 per gallon in May as demand increased from motorists wanting to hit the road after a year of the coronavirus pandemic. It’s the first time the price has persistently stayed over that mark since summer 2018, according to GasBuddy records.

Hurricane Ida passed through the U.S. Gulf Coast about six weeks ago, shutting down key oil refineries in that area for an extended time, and the average cost for gas has continued to go up. Another factor has been a lack of logistical support, as oil and gas are yet another consumer product waiting to be offloaded at ports and trucking companies that ship them are experiencing worker shortages, according to Forbes.

The latest hit has come from an old foe — OPEC.

In recent meetings, the Organization of the Petroleum Exporting Countries, along with key oil producing non-members, agreed to not increase production after previously agreeing that they would. After briefly dropping to below zero during the coronavirus pandemic in April 2020, the price for a barrel of oil went above $80 last week.

“The key driver for this recent rise in the price of gas is crude oil, which typically accounts for between 50% and 60% of the price at the pump,” said AAA spokesman Andrew Gross. “And last week’s decision by OPEC and its oil-producing allies to not increase production further only exacerbated the upward momentum for crude oil prices.”

OPEC, Russia and their allies decided to maintain a production cap of 400,000 barrels per day in November instead of the previously agreed 800,000 barrels per day.

Furthermore, AAA says gas demand also rose slightly in the U.S., which added to the price increase.

“Last week saw oil prices advance to their highest in seven years, with a barrel of West Texas Intermediate crude oil surpassing the critical $80 per barrel level,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “The nation’s gas prices were also pushed to their highest since 2014, all on OPEC’s decision not to raise production more than it already agreed to in July.

“The OPEC decision caused an immediate reaction in oil prices, and amidst what is turning into a global energy crunch, motorists are now spending over $400 million more on gasoline every single day than they were just a year ago,” DeHaan said. “The problems continue to relate to a surge in demand as the global economy recovers, combined with deep cuts to production from early in the pandemic.”

DeHaan says that if drivers don’t curtail their travel prices will continue rising for the foreseeable future. That’s a tall order with Thanksgiving and Christmas on the horizon.

“If Americans can’t slow their appetite for fuels, we’ve got no place for prices to go but up,” he said.

Source: Berkshire mont