American drivers are seeing record high gas prices as the cost of crude oil soared amid halted OPEC negotiations about limits on production.
Gas prices hit an average of $3.13, the highest they've been in seven years and a 44percent increase on last year.
And drivers can expect gas prices to increase another 10 to 20 cents through the end of August, bringing the national average well over $3.25 this summer, according to AAA. Many fear the rising gas prices could worsen inflation and hamper the economy's post-pandemic recovery.
Prices have soared as negotiations between the Organization of the Petroleum Exporting Countries (OPEC) ground to a halt.
OPEC, which has been limiting supplies of oil, had planned a meeting on Monday to develop a plan to release more barrels to match spiking demand as travel and business begin to recover to pre-pandemic demand.Insurance Loans Mortgage Attorney Credit Lawyer
But, in a rare public spat, the UAE and Saudi Arabia clashed over the proposals, which would see the UAE proportionally cut its oil production by 18 percent, while Saudi Arabia slashed its own output by 5 percent.
Under Saudi Arabia's plan, OPEC raises output by two million barrels per day from August to December 2021, but would then extend remaining cuts to the end of 2022. The UAE complained that extending the cuts to December 2022, from its current deadline of April 2022, would be 'unfair to the UAE'.
Unable to reach agreement, OPEC cancelled Monday's meeting.
Oil prices then soared to new highs, with Brent crude rising 1% to $76.96 a barrel, as investors debated whether the move meant a near-term deal for barrels was off the table.
The average price of a gallon of gas still sits at $3.13, a increase of 95 cents or 44 percent from the same period in 2020, when demand was low because less drivers were on the road during the pandemic.
American drivers are seeing increasingly high gas prices amid halted OPEC negotiations about limits on production
Gas prices began skyrocketed last week to the highest they've been in seven years as demand skyrocketed because more Americans were preparing to travel over the July 4 weekend
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The cost of crude oil rose almost 60percent this year and is hovering around the highest prices it's been in six years
Gas prices are currently highest in California, where it costs on average about $4.31 a gallon of regular fuel, according to AAA statistics. And at the end of June, a gas station in downtown Los Angeles had gas prices set at almost $6 a gallon. Hawaii is directly below California, with the price of regular fuel currently averaging $4.03 a gallon.
West Texas Intermediate, the main grade of U.S. crude, climbed to $75.23 a barrel on July 1 – their highest level in six years – before dropping 0.5percent to $74.68 following the cancellation of Monday's meeting, according to a FactSet chart published by the Wall Street Journal.
Brent crude, the benchmark in global energy markets, was most expensive on Monday at $77.16 a barrel, the highest level since late 2018.
The last time crude was more than $76.40 and the national average gas price was at $3.25 was November and October 2014, respectively.
'Robust gasoline demand and more expensive crude oil prices are pushing gas prices higher,' said AAA Spokesperson Jeanette McGee in the company's news release. 'We had hoped that global crude production increases would bring some relief at the pump this month, but weekend OPEC negotiations fell through with no agreement reached. As a result, crude prices are set to surge to a seven year-high.'
The Biden administration is now urging OPEC to find a compromise that will increase oil production.
'Administration officials have been engaged with relevant capitals to urge a compromise solution that will allow proposed production increases to move forward,' a Biden official told Bloomberg News.
The staffer also told the outlet it's critical energy supplies stay in line with demand as the US and the world gradually recovers from the pandemic.
The impasse follows a July 4 weekend where Americans faced seven-year high prices at the pumps.
The impasse follows a July 4 weekend where Americans faced seven-year high prices at the pumps. The average price of a gallon of gas stands at $3.13, up 95 cents, or 44 per cent, from 2020
A gas station in downtown LA posts gas prices of almost $6 a gallon at the end of June
OPEC hasn't set a date for the next meeting and, if they don't make a deal, allies likely won't increase production in August which would mean oil supplies in the US will be below demand.
OPEC, The Organization of the Petroleum Exporting Countries, accounts for almost half of the world's oil production and more than 80 percent of the world's reserves.
Their mission is to