Rising gas prices to reverse course
May 29, 2018--7:02 a.m.
Motorists should soon catch a break from rising gas prices.
Oil and gasoline futures prices plunged after Russia and Saudi Arabia expressed interest in raising oil supply.
"This news couldn't come at a better time, as motorists roll into the summer driving season," said Mark Jenkins, spokesman, AAA - The Auto Club Group. "The drop in crude should amount to a discount of at least 10 cents at the pump, in the short term. Yet that will not happen overnight. Retailers are usually slow to lower prices, especially those who bought shipments of gasoline when prices were at a premium."
Gas prices in Georgia increased 6 cents during the past week. The state average on Memorial Day was $2.84 - the most expensive for the holiday since 2014 when the average price was $3.62 per gallon.
Georgia motorists are paying 61 cents more per gallon than a year ago. It now costs $43 to fill an average size tank of gasoline - an increase of nearly $10 from this time last year.
Crude oil prices declined late in the week after Saudi Arabia and Russia discussed raising oil output by as much as nearly 1 million barrels per day. A decision is not expected until June 22-23. Saudi Arabia and Russia have been part of a voluntary production cut agreement among both OPEC and non-OPEC oil producing countries.
The agreement called for a reduction of 1.8 million bpd in the market. The effort to reduce the global oil glut and raise oil prices worked faster than expected. In fact, there are now fears of a supply shortage, as Venezuela's oil market has collapsed, and new sanctions against Iran will reduce its contributions to global supply.
Early last week, U.S. oil prices traded at 3.5-year highs of nearly $73 per barrel. On Friday, crude prices plunged below $68 - the lowest daily closing price in three weeks. Overnight, WTI fell below $67. Oil has not settled below $67