Gas Hike: OPEC Not Planning To Boost Oil Production Anytime Soon

June 12, 2009
Gas Pumps

Gas Pumps

Gas prices have crept up over the past few months, and while experts don't expect things to reach last summer's $4+ per gallon unpleasantness, prices will likely go well beyond their current $2.40-ish average. That's partially because of summer, when prices surge thanks to higher demand and more expensive fuel blends. However, in this case, it's also because OPEC isn't planning to boost production until oil hits $100 per barrel.

Right now, oil is hovering around $70 a barrel--in fact, yesterday marked the first time that the price crossed the $71 threshold in almost a year. Curiously, Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah says that the current rise in price isn't actually due to increased demand, but because of commodities traders who've invested heavily in oil, banking on a gradual price hike plus the weakened U.S. dollar. But whatever the cause of the increase may be, drivers still have $30 per barrel more to weather before we can expect any help from our friends in Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

More daunting is the news that the $100 mark isn't an automatic trigger for OPEC to boost production. Sheikh Ahmed said that the cartel had rejected the idea of increasing output at $75, "but if it reaches $100, maybe". Yes: "maybe".

[Bloomberg via Autoblog]

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