GasBuddy is predicting a 70% odds the national average cost of gas could breach $3 per gallon by Memorial Day.
Thursday, the Organization of the Petroleum Exporting Countries (OPEC) finished a meeting that decided large cuts to oil production in 2020 will generally be extended into 2021.
Early in the pandemic, OPEC cut some 10 million barrels per day of oil production, according to GasBuddy. As vaccines have reached more people, the country's demand for oil has rebounded notably.
GasBuddy explained OPEC's decision to minimally raise oil production to meet the global rise in demand will lead to crude oil prices growing to new highs. As of now, a barrel of West Texas Intermediate Crude Oil is nearing $65 per barrel, the highest level since 2019.
GasBuddy noted that President Biden's recent decisions to rescind the Keystone XL pipeline and end approval of new leases on federal land are not playing a role in today's rising oil prices. There is no shortage of pipeline capacity and U.S. producers are not racing to install new rigs since some existing wells remain shut down.
Patrick De Hann, head of petroleum analysis at GasBuddy, said the outcome of OPEC's meeting will continue a growing imbalance between supply and demand. This in turn will put more pressure on oil prices to rise as global demand rebounds.
"A continued recovery seems likely, lead by American motorists filling their tanks at the fastest pace since the pandemic began," said De Hann.
According to GasBuddy, the last time the national average reached the $3 per gallon threshold was over 2,300 days ago on October 10, 2014. However, the national average did get close in 2018 when it reached $2.97 per gallon.
GasBuddy offers these tips to save money on gas admist price increases:
- Shop around: Gas prices can vary as much as $1 per gallon in metropolitan areas. Searching for the best gas prices before filling up with tools like the free GasBuddy app can ensure drivers pay the lowest price.
- Drive mindfully: Aggressive driving can reduce gas mileage by as much as 40%.
- Pay and save: Joining a gas station loyalty program can save drivers hundreds of dollars per year on gas.
