Gas prices projected to continue to increase after OPEC cuts
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Gas prices have slowly been increasing — in part due to recently announced international oil production cuts — which could be bad news for those planning a road trip this summer.
Driving the news: Houston's average price of gas was $3.24 per gallon as of Tuesday. In early March, just six weeks ago, average gas prices in the region were about $2.82, according to GasBuddy data.
- Yes, but: Gas prices are about 50 cents lower than they were this time last year.
Zoom out: Gas prices in Houston are lower — and have been lower — than the rest of the country. The national average is $3.66 per gallon.
Context: Earlier this month, Saudi Arabia, Russia and other OPEC members surprised the market by announcing a large production cut of about 1.2 million barrels per day.
- The production cut means supply will decrease just as demand for oil increases during the summer driving season, Claudio Galimberti, senior vice president of analysis at Rystad Energy, said at a Rice University Baker Institute energy panel Tuesday.
What they're saying: "I have to warn you that we are more likely going to see higher prices going in the next few months," Galimberti said.
- Mark Finley, a Baker Institute fellow in energy, predicts gas prices will go up roughly 30 more cents per gallon in the summer.
Of note: Fuel prices are cyclical, with summer months usually more expensive than winter months because refiners switch from winter- to summer-grade formulations, which are more expensive to use, oil analyst Andy Lipow tells Axios.
What we're watching: With hurricane season right around the corner, Gulf Coast refineries could be at risk, possibly further disrupting the supply of refined products, Lipow notes.
The bottom line: "There is some increased geopolitical risk in the oil market. Those of us who drive big and inefficient vehicles or planning on taking long road trips or have long commutes, we're going to be more exposed to that risk," says Jim Krane, a Baker Institute fellow in energy.