Production cuts announced this week by a group of oil producing countries known as OPEC+ are expected to drive up U.S. gasoline prices, a development that could pose problems for the Democrats just one month ahead of midterm elections.
Analysts told The Hill that the decision to cut their oil targets by 2 million barrels per day is expected to send gasoline prices up by between 15 and 25 cents.
OPEC+ announced on Wednesday that it would cut oil production by 2 million barrels per day. Prior to the announcement, oil prices had already been on the rise amid speculation and rumors of a potential cut.
On Thursday, prices for a U.S. benchmark were around $89 per barrel on Wednesday, up from as low as $76 per barrel in late September. The international benchmark was at around $95 per barrel, up from $84 in late September.
Andrew Lipow, president of Lipow Oil Associates, projected that for consumers east of the Rocky Mountains, this could send prices up by between 15 and 20 cents over the next week to 10 days.
He added, however, that they may be seeing between a 5 and 7 cent increase already.
Marianne Kah, an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy, made a more drastic projection, saying that prices could go up about 24 or 25 cents over the next few weeks.
“It doesn’t enter the gasoline price immediately, but I guess the question is, what [are] crude prices from here,” said Kah, the former chief economist at oil company ConocoPhillips. She noted that about half of the price of gasoline is directly related to the price of crude oil.
Kah also said that the timeline for price increases may vary across the country.
Lipow limited his projection to just the eastern and central U.S. because the West Coast has been seeing an additional price spike amid temporary refinery outages.
He said that he expects these prices to fall in the coming weeks as those refineries come back online.
“On the West Coast we have a completely different situation because gasoline prices have soared over the last month due to a number of scheduled as well as unplanned refinery outages and we’re now beginning to see West Coast gasoline prices fall,” Lipow said.
“We expect the majority of these refiners are going to be back from their maintenance by the middle of October,” he said.
However, he still expects the national average to “tick on up” in light of the OPEC cuts.
The timing is particularly bad for Democrats and the Biden administration, as the party in power typically shoulders the blame for high fuel prices.
Republicans previously hit Biden and congressional Democrats for soaring gas prices, high grocery bills and inflation at large. However, oil and gasoline prices are part of a global marketplace and are influenced by factors that are, for the most part, out of the president’s control.
Still, these issues are almost guaranteed to play a factor in how the American public votes in the upcoming elections. Republicans’ message may resonate with consumers who are fed up with the pain at the pump.
Asked where prices are expected to be on election day, Lipow didn’t give an exact number, but said that prices would be “too high for the administration’s liking.”
And the analysts say there’s little the Biden administration can do to tackle the issue between now and early November.
“I don’t think there are good short-term options,” Kah said.