TAMPA, Fla. (WFTS) — The Organization of Petroleum Exporting Countries said it's cutting daily production by 100,000 barrels next month.
OPEC averages 28 million barrels.
However, brighter days appear to be ahead. According to AAA, gas is averaging $3.52 a gallon. Prices peaked on June 13 this year at $4.89. But we're still above the 2021 high of $3.36.
AAA spokesperson Mark Jenkins said that could change.
"We're fast-forwarding into the fall and winter months when there's traditionally less demand for fuel. And now, there's a lot of concerns in the industry about potential for a global recession. In the energy market, there's just a lot of hesitation, so that's contributing to lower prices overall," Jenkins said.
This is OPEC's first production cut in more than a year.
"Overnight, it seemed like it was causing oil prices to increase a couple of dollars, but those gains have been erased mostly throughout the day. It appears as though the energy market has digested this information and is basically just shrugging it off and moving on," he said
Florida Gulf Coast University economics professor Victor Claar said OPEC's decision is an effort to stabilize falling prices.
"If they want that price to rise, they release less. And if they want that price to fall, they release more. So the 100,000 number sounds like a big number. But actually, in terms of the global market, it's not that much," said Claar.
Claar said those falling gas prices we're seeing could create an economic domino effect.
"It's possible that lower oil prices and ultimately lower gas prices can translate into some lower prices overall, given that most of the things that we buy in person or have delivered to our houses require oil or gasoline at some point along that supply chain," he added.
But Jenkins said don't celebrate the future of oil prices too much.
"I think it's important to know that this is very much a volatile market. It's changing every single day. So it is really hard to develop long-term expectations of what prices are going to be down the road," he said.
