It’s not your imagination: Gas prices are shrinking in Miami.
According to the American Automobile Association (AAA), in the last week, the price of regular unleaded gas fell by .03 cents per gallon locally, to $3.31. For comparison, the national average is $3.36 per gallon and Broward County drivers are paying $3.35 per gallon of regular unleaded.
Across the state of Florida, the average price of a gallon of unleaded regular gas is at $3.30. But while prices are down compared to a month ago, they’re still $1.15 over what they were a year ago.
The reason behind the tumbling prices is the Organization of the Petroleum Exporting Countries (OPEC) and its allies, often referred to as OPEC+, continuing to maintain a plan to increase crude oil production by 400,000 barrels per day. This was announced on Dec. 4, during a webinar with the Italian think tank ISPI.
Mohammad Barkindo, secretary general of OPEC, said during the webinar, “We will continue to do what we know best to ensure we attain stability in the oil market on a sustainable basis.”
Barkindo added that in terms of oil demand, the estimate at the moment is for a growth of 5.7 million barrels per day.
“In 2022 we expect another 4.2 million,” he said.
Barkindo also said that uncertainty and volatility on the markets was also due to extraneous factors, such as the ongoing COVID-19 pandemic, and not necessarily the fundamentals of oil and gas.
"Now we are on course of returning the level of consumption in 2022 to pre-COVID levels," he said.
The real uncertainty is the new omicron variant of the virus, and what it could mean for overall oil consumption nationally and globally. Florida has been returning to almost normal levels of business and tourism and lockdowns are unlikely. Globally, however, several countries have already begun imposing new mandates.
Belgium is requiring people to work from home and ordered schools closed a week earlier for Christmas. Ireland has closed nightclubs and prohibited large gatherings. France is also closing nightclubs in the country for four weeks and tightening some COVID-19 rules in primary schools, mostly around masks.
“We might not have any lockdowns in the United States, but there are other countries that could have lockdowns,” AAA spokesman Mark Jenkins said. “So, it’s just that potential impact on transportation and fuel demand that has the crude oil market concerned.”
Volatility in the commodities market is really the driver at the end of the day for gas prices.
“Crude oil prices have plummeted,” Jenkins said. “They are down as much as 15%. What that means is that it is less expensive to produce gasoline. We could be looking at a gas price drop of anywhere from .20 to potentially .30 cents. That could play out over the course of a couple of weeks.”
Monday did see oil prices increase; early trading had a barrel of crude oil at $72. This was up $2 from the beginning of trading. However, it was well below the most recent peak of $86 per barrel that was seen in October. With the global economy resurging and production still restrained from pre-COVID numbers, gas prices were driven much higher, one of the main factors in the consumer inflation that’s reached 6.2% this year.