The Rise of Oil & Gas Prices in 2021
Similar to so many other products, the coronavirus pandemic lies at the foundation of the fuel price rises. Since the Covid-19 virus’s first economic blow in the spring of 2020, demand for gasoline has slowly climbed in lockstep with increasing business activity.
However, supply has not recovered as swiftly as demand, owing to delays in rebuilding drilling capacity, increased transportation costs, and slow output growth. As a consequence, crude oil prices have steadily increased in recent months, with prices rising to over $80 last October 11. Oil closed above $80 last on October 31, 2014.
Oil prices were at $85 per barrel on October 20 when they were $65 per barrel exactly two months ago. A barrel of oil contains 42 gallons, thus every dollar rise in the price of a barrel amounts to around 2.4 cents per gallon.
In the last two months, oil prices have increased by 48 cents a gallon. Gas prices have grown by 15 cents throughout this time period, from $3.17 to $3.32 per gallon, according to weekly government statistics.
According to the White House, the price increase is due to OPEC and Russia failing to increase output adequately. OPEC and Russia account for little more than half of the world’s oil output together, and analysts think that they can do the most to expand supply, resulting in reduced gasoline prices.
After aggressively lowering output in the early days of the COVID-19 outbreak, the OPEC-led cartel has been progressively recovering production, but not completely. Since July, OPEC and Russia have increased their monthly output by 400,000 barrels per day, less than the United States and other oil importers such as China, India, and Japan had requested.
It is unknown where oil prices will be heading in the next months. The fact remains, however: Today’s gas prices are rising in response to far greater global challenges.
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