WEST MICHIGAN — Gas prices in West Michigan are expected to stay around $2.75 for some time, as more people fill up and U.S. production struggles to keep up.
There are several factors pushing the price back up, several of them related to the improvement of our economy at large.
“Just to put this all into context, this is recovery based," said Patrick De Haan, who is the lead petroleum analyst for GasBuddy.
"Supply has not risen according to demand.”
We are seeing the highest prices at the pump since the start of the pandemic, currently around 40 cents higher than what we saw in February 2020.
First of all, De Haan says, "Improvements in the COVID pandemic are meaning that Americans are filling their tanks up more often, fewer state restrictions on where they can go, and restaurants, are meaning Americans are getting out more often.”
There are just more of us filling up right now. Unfortunately, the United States hasn't been able to keep up with production.
“U.S. production has weakened a bit as fracking has become more problematic, either regulatory-wise or because some of the firms have gone out of business because of the recession," said Paul Isely, associate dean at GVSU's Seidman College of Business.
"It's increased the power of OPEC a little bit.”
OPEC—an organization made up of 13 mostly Middle Eastern oil-producing countries—is picking up on some of that demand.
“OPEC can really put some volatility in this for us, and probably will result in them trying to drive up the price of oil a little bit more,” Isely said.
The organization is scheduled to meet on March 4.
“Hopefully when OPEC meets next week, it will raise production," De Haan said Friday.
"That may ease the pressure on the price of oil, and could mean that we potentially could avoid hitting $3 a gallon.”
If they don't increase production, we could very well hit that $3 a gallon mark in the near future.
When we talk about gas prices over the next few years, we could see additional price spikes if U.S. production is further regulated.
Isely told FOX 17, “The new administration is looking to put a lot more regulations on fracking, and likely will make it more difficult and more expensive to frack. And so that's going to increase some of the costs.”
De Haan says that while these sorts of political moves aren't currently affecting us, "if demand does eventually return to normal, the administration's policy shifts on the Keystone Pipeline and drilling could affect us in the next couple of years.”