By Scott Huntington
Gas prices are on the rise. In fact, since crude dropped to decade lows in the summer of 2016 — following decade highs in 2014 — prices have steadily risen across America. Experts have credited this price rise to international oil exporters, and the Organization of the Petroleum Exporting Countries (OPEC) in particular.
Since the low prices of 2016, the countries within OPEC have agreed to cap global oil output in an attempt to drive prices higher internationally and dry out the flooded market. The cap on production has resulted in a steady rise in prices, landing us at a present three-year high that has many worried about the future of gas prices. In an official request to OPEC, the White House requested that OPEC release more of its oil product into the market in hopes it will help lower international and domestic prices.
The request — that OPEC releases an additional 1 million barrels of crude oil a day — was brought up in a meeting by several prominent OPEC representatives over the weekend. The benefits of this move — potentially more international oil sales — are balanced against the obvious benefits of a higher price. A noncommittal statement was released following the meeting, pledging “stable oil supplies [will be] made available in a timely manner to meet growing demand and offset declines in some parts of the world."
However, international prices might be headed even higher, given the economic sanctions recently imposed on Iran’s oil exports. The sanctions — which coincidentally displaced about 1 million barrels of oil a day — may have some correspondence with the request for further market saturation. These sanctions, coming on the heels of an annihilated Venezuelan economy, paint a bleak picture for the future of oil prices. The economic collapse of Venezuela, one of the primary North American oil tycoons, helped drive prices higher than expected by the OPEC nations.
Further, American oil production has traditionally struggled to compete with international prices. In some senses, the hiking of global oil prices in recent years has been massively beneficial for American oil enterprises, allowing for a more competitive international position.
However, assuming oil prices continue on their current trend, the increasing unaffordability of foreign oil could send ripples through the international economic web. For some American oil ventures, the continued price drive by foreign competitors spells opportunity. Others interested in alternate energy sources see the rising prices as a chance to reach the American public.