Oil prices traded above $81 per barrel in Monday’s action, the highest level for oil prices since 2014.T hat, in turn, as pushed both diesel and gasoline prices to the highest levels reported in seven years. Why have oil prices increased so much over the past couple of months?
Patrick DeHaan with GasBuddy said the higher oil prices are all part of a developing global energy crunch.
“Chinese coal inventories are very low, they are having to cut power consumption there, to make good and have some form of electricity. In the meanwhile, there’s been a natural gas crisis in the U.K., and Europe seeing natural gas prices at all-time highs. All of that supports the price of crude oil which can be use as a substitute to generate electricity.”
DeHaan noted OPEC’s decision last week to not increase oil production also contributed to higher prices. When will we start to see oil prices, thus fuel prices move lower? DeHaan says that’s one of a host of questions very difficult to address, let alone answer at this time.
“Will we see relief globally? Will coal movements start picking up? Will countries start to respond to the increase in natural gas? Will Russia continue to use natural gas as a political weapon? There’s a lot of unanswered questions made more challenging to answer by the fact that COVID has really wreaked havoc on logistics and various bottlenecks have popped up that wouldn’t have been anticipated earlier this year.”
With the increase in oil prices, does that mean U.S. oil production will soon increase? For that and much more, check out our Price at the Pump podcast:
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