ODESSA, Texas — The OPEC+ alliance has announced that it will cut oil production by two million barrels per day starting in November. They say the decision was due to the “uncertainty that surrounds the global economic and oil market outlooks.”
This significant decision by OPEC+ appears to be an attempt to stabilize the price of international crude oil. It already caused oil trading to increase on Wednesday, and consumers should expect gas prices to begin to increase as well.
Gas prices have been favorable to consumers as of late, but that is likely to change with oil production cuts now creating an increase in oil price.
“While there is a lot that goes into the price of gasoline at the pump, part of that is the raw material that gasoline is refined from, which is crude oil,” said Stephen Robertson, Executive Vice President of the Permian Basin Petroleum Association. “So, if the price of crude oil goes up, like it has [Tuesday] in trading, that will ultimately impact the price of gasoline at the pump.”
Many other oil-produced products could see an increase in cost as well in a very complicated market. Supply and demand plays a factor, along with inflation – a factor whose stability is not helped by price fluctuation.
Volatility makes many things hard to predict, including the impact this decision will have on the Permian Basin.
“So, I think while a decrease in supply on the international market will have an impact on the market, there are so many other factors out there that are continuing to foster this feeling of volatility in so many different segments of the market that it’s hard to see how that specific change is going to make a change in operations in the Permian Basin,” said Robertson.
Congressman August Pfluger called for American energy independence, as he considers energy security to be an underlying economic driving force.
“This is why we have to have this mindset that we’re going to unleash American energy,” Pfluger said. “That we’re going to do everything we possibly can to not just be independent in this country, but also dominant in this country. So, certainly market forces will play out here, it’s anyone’s guess. Supply and demand are pretty simple factors, which will likely result in an increase in price to consumers throughout the value chain.”
Congressman August Pfluger thanked oil and gas workers in the Permian Basin for doing their job despite federal government regulations he said make it harder to compete. This area currently produces nearly five-and-a-half million barrels of oil per day.