Gas prices are on the rise, and they’re unlikely to fall any time soon.
Crude oil reserves are 9% below the five-year average, the second largest refinery in the country–producing 593,000 barrels per day–is shut down, and volatility in prices due to anticipation of future COVID variants are likely to increase the cost of crude oil in the markets.
A planned surge in production from two major oil producers isn’t helping.
“Exxon this week announced a 25% boost to its Permian Basin output, while Chevron plans to increase by 10%, but off a larger production base,” increasing production by as much as 900,000 barrels a day, according to Bloomberg.
“I’m absolutely concerned,” ConocoPhillips Chief Executive Officer Ryan Lance said on a conference call Thursday. “If you’re not worried about it, you should be.”
That’s because “a rebounding shale sector is a double-edged sword for global oil markets. Too much growth and it could prompt a response from Saudi Arabia and its allies, who have twice engaged in damaging price wars in the past decade after shale grabbed too much market share.”
On top of that, we’ll soon switch over to summer gas (which doesn’t evaporate as easily as winter gas, but which averages about 10 cents more per gallon).
Between increased travel anticipated this spring, increased summer prices, the national stockpile needing replenishing, and unknown second-order effects of a short-term surge in production–which necessitates more frequent maintenance–Americans should brace for an expensive summer.
If there’s a silver lining for New Mexicans, it’s in the December 2021 GasBuddy report projecting slightly less severe 2022 gas prices for Gulf Coast states than the rest of the country.
“The Gulf Coast and Midwest remain the areas of the country that are less prone to price spikes from refinery outages, since these areas have the largest refining capacity.”–GasBuddy, 2022 Fuel Price Outlook
Categories: NM GAS REPORT