Posted in: Gas Prices,
by Patrick DeHaan on Jun 13, 2011 02:30 PM
Oil prices have started off the week be gently falling. Late last week we received word that OPEC producer Saudi Arabia was going to increase their production, going outside of OPEC's "official" decision. Such a move is likely to spark anger at the Saudi's, but high price hawks Iran and Venezuela likely have little in their power to stop such an increase.
The Saudi's move highlights the instability of oil producing countries and further undermines the quotas set by OPEC. While oil prices initially rallied last week on OPEC's inability to increase production, prices are now coming back down after the Saudi's flexed their muscles and said they will increase production. While there are certainly politics involved in the Saudi's decision, it still is a win for U.S. motorists.
By next Monday, the U.S. average may drop to $3.65/gallon while the Canadian average may fall to 123.5c/L. Motorists should be very aware that in the meanwhile, hurricane season is underway, and should storms begin forming at an early and more rapid pace than past years, the market may completely ignore Saudi's output boost, choosing instead to be concerned about Gulf Coast refining capacity.
It was just a few years ago that Katrina and Ike caused a large amount of production to go offline for months and years, and with the stakes higher this time because of economic improvement, a hurricane could devastate not only property owners, but motorists as well.