Yahoo Finance Gas prices differ from state to state. Will the OPEC cut in oil production make it worse?
As major oil-producing countries plan to slash production, U.S. gas prices may rise again, with some states potentially feeling the brunt more than others.
The OPEC+ alliance of oil-producing countries announced Wednesday it will cut production by 2 million barrels per day starting in November, a move that may put further upward pressure on U.S. gasoline prices.
“Will American drivers see an immediate impact?” AAA spokesman Andrew Gross said, noting that oil makes up about 60% of what drivers pay for at the pump. “That's really hard to say...There are much more immediate reasons why the price of gasoline has been going up.”
Even before the group’s decision, gas prices had started ticking up across the nation after briefly declining. The national average gas price stood at $3.89 as of Friday, according to AAA, up from $3.79 the week before.
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Why do gas prices differ between states?
Regional differences in gas prices have been stark mainly because of refinery issues, with prices in California currently hovering around $6 a gallon while Texas and Gulf Coast prices are just over $3.
On the West Coast, maintenance that temporarily shuttered at least six refineries limited supplies, increasing pump prices, Gross said.
The refineries, however, are coming back online and California officials allowed less expensive winter-blend gasoline to be sold a month in advance, bringing drivers relief. California pump prices dropped Friday to $6.39.
The upper Midwest, meanwhile, saw gas prices spike after a deadly explosion and fire at a refinery in Toledo, Ohio.
“While the West Coast might see some price easing, it’s going to be a little while in the upper Midwest,” Gross said.
Overall, gas prices vary across state lines due to proximity to oil refineries and pipelines, and issues at the plants, and state taxes.
“When supply is adequate in every region and when there are no refinery issues, really the only difference you see between states and regions is the difference in gasoline taxes,” said Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks oil and gas markets.
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What does the OPEC+ decision mean for US drivers?
Prices at the pump may go up on the East Coast, as well as in the South, Northeast and the Rockies because of the OPEC+ decision, said De Haan.
The West Coast, Great Lakes and Plains, meanwhile, could see prices drop as refinery issues in the area improve. But with OPEC+ cutting production, prices may not go down as much as they could have otherwise, De Haan said.
“Everyone's gonna feel the impact to the tune of 10 to 30 cents, ” De Haan said.
Why is OPEC+ cutting production?
OPEC+ said the move was based on the “uncertainty that surrounds the global economic and oil market outlooks,” the Associated Press reported.
Saudi Arabia’s Energy Minister Abdulaziz bin Salman said the group is adjusting supply ahead of a possible dip in demand, according to AP.
The OPEC+ decision, De Haan said, could put the global economy in a “very precarious place because there is very little margin for error.”
“I think there's more oil production needed,” De Haan said. “OPEC is doing this cut at a very inopportune time – global oil inventories remain very tight.”
President Joe Biden called the move “disappointing,” and White House press secretary Karine Jean-Pierre said the president considered the decision “short-sighted” as the global economy still reels from the impact of Russian President Vladimir Putin’s invasion of Ukraine, AP reported.
What has Biden done to try to rein in gas prices?
After OPEC+’s announcement, Biden said Thursday his administration is looking at “alternatives” to lower gas prices.
Biden in March ordered the release of 1 million barrels of crude oil a day from the nation’s strategic petroleum reserve for six months and told oil producers to immediately cut costs for Americans.
“There's not a lot any administration can do – Republican or Democrat – when oil prices started to go up because oil is a global commodity,” Gross said. “We don't set the price here in this country, nor do we set the price for gasoline.”
Contributing: Associated Press
This article originally appeared on USA TODAY: Why are gas prices higher in California than in Texas?
