HomeWorldDrivers are stuck in limbo as the world's oil supply is reshuffled

Drivers are stuck in limbo as the world’s oil supply is reshuffled

NEW YORK (AP) — At a gas station outside New York City, retired probation officer Karen Stowe confronted a price of the bomb that he did not want to pay. Instead, he bought groceries at the convenience store, planning to buy cheaper gas elsewhere.

“The price is so high that people have to think a lot about where they are going to drive,” said Stowe, who had just volunteered at a food pantry. “People are in trouble, and that’s the truth.”

Although drivers in the US, Europe and elsewhere are taking a break from the sky high gas prices endured over the summer, the cost remains difficult for many who have been battling relentless inflation. The US average was $3.19 per gallon, below a record $5 in Junewhile European Union pump prices have fallen by almost the equivalent of 40 cents, to $6.58 a gallon, since October.

Drivers are now hoping that the situation will not worsen after a series of cuts linked to Russia’s war in Ukraineaccidents and the global economic slowdown have put the world’s oil supply to the test. While oil and gasoline prices have fallen despite a recent supply shortage, those threats could end up driving up costs this winter.

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— Dozens of oil tankers were trapped in Turkey for days.

“The global system can probably withstand a few more days of these outages, but if they persist, they will play a significant role in driving prices up,” said Claudio Galimberti, Rystad Energy’s senior vice president of analysis.

“It can quickly turn into a huge wave of COVID engulfing hospitals and then it will have a worse effect on demand than COVID policy,” Galimberti said.

Restrictions on Russian exports they are likely to have a bigger impact on oil prices next month. Although Western nations have banned Russian oil, customers in India and China are buying it, so there is enough oil on the market for those who need it. More than 97% of Russia’s seaborne crude exports went to China and India last month, according to Refinitiv, a provider of financial market data.

“We do not ask our companies to buy Russian oil. We ask them to buy oil,” Indian Foreign Minister Subrahmanyam Jaishankar said in Parliament last week. “But it is a sensible policy go where we get the best deal in the interest of the Indians, and that’s exactly what we’re trying to do.”

In February, world oil supplies could be further constrained as European nations will not be able to buy Russian refined products such as gasoline and diesel, so Russia could reduce oil production.

“So far, there has not been a major drop in Russian production. But once Russia is unable to export products to Europe, it will have to reduce production, and that will result in a supply shortage, which will most likely be reflected in prices,” Galimberti said.

Russia could also decide not to produce oil due to the G-7 price cap. Their oil sells for less than that now. But if the price rises and approaches the top, Russia could decide to take the oil off the market, analysts said.

“There is another shoe to drop on that front,” said Kevin Book, CEO of Clearview Energy Partners.

The price cap will ensure a discount on Russian oil, especially in light of the $100 a barrel Russia earned just a few months ago, White House press secretary Karine Jean-Pierre said.

“We are focused on limiting Putin’s ability to profit from rising prices to finance his illegal war, while promoting stable global energy markets,” Jean-Pierre said. “This is not about Russian oil being taken out of the market. It is about the cap: the cap at this level maintains clear incentives for Russia to continue exporting, and we think it should.”

International standard Brent crude was trading at around $82 a barrel on Thursday. It’s likely to grow to $92 a barrel on average next year, according to projections by the US Energy Information Administration. That’s still down from $125 seen this summer.

When it comes to pump prices, they’re lower than last year, but Americans have paid $2 to $3 a gallon for most of the past decade, according to AAA data.

In the EU, where taxes account for a larger part of the cost of gasoline, prices fell to 1.70 euros per liter ($6.58 per gallon) in the first week of December from 1.80 euros per liter ($ 6.96 per gallon) at the end of October. , according to figures from the block’s Executive Commission.

The recent price drop, coupled with freezing weather, has kept 28-year-old Aria Razdar behind the wheel of her BMW hatchback in Frankfurt, Germany. During the summer price spike, she rode a Vespa to work and school, but gas prices dropped and so did the temperature.

“Right now the prices are a little more reasonable, they’re actually still high, but in comparison,” said Razdar, a child care worker studying to be a teacher, as he finished pumping fuel in a freezing wind.

He spent just under 30 euros ($32) to fill up the tank for the week, a cost he said he could manage for the convenience of driving 12 minutes to work instead of spending 45 minutes on public transportation.

Others also wanted prices to be lower.

Gary Schwuchow, a retired maintenance supervisor, said he takes fewer road trips and saves money because he lives off his pension and Social Security payments.

“I used to be able to fill up the tank for $40 or $42, and now it’s almost $60,” he lamented as he filled up his Nissan Sentra at a station in Yonkers, New York, where a gallon of regular gasoline was sold. $3.79. “I no longer fill it. I put in $25 at a time.”

McHugh reported from Frankfurt, Germany. Associated Press writers Fatima Hussein in Washington and Ashok Sharma in Delhi contributed.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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