High oil prices are here as the cost for a barrel of oil could rise to nearly $100 later this year. Increased demand as more and more Americans take to the roads and airways has caused the spike, but Baton Rouge economist Loren Scott says plans by OPEC Plus, a coalition of oil exporters that includes Russia, should begin to bring prices back down, sooner rather than later.
“The OPEC Plus countries are adding 400,000 barrels a day,” Scott said. “I think that’s gonna have a tendency to bring the price down below where it is right now.”
The increases by OPEC Plus could cover the expected increase in demand for oil in 2022.
Of course, the first place most Americans will feel the impact of higher oil prices is at the gas pump. With the state average for regular gas at more than $3.13, that could be a major hit, even if it doesn’t last long.
“For about every $10 increase in the price of oil, the price of gasoline at the pump is going to go up somewhere in the neighborhood of 50 cents a gallon,” he said. “So the first thing you’re gonna see is if it keeps on the trend it’s on now, you’re gonna start seeing the price at the pump go up.”
While individuals may feel a pinch on their pocketbooks for a few weeks, Louisiana should reap some financial benefits from those higher oil prices, both for the state’s revenue and for businesses.
“It helps increase how much we collect in taxes in particular, and then of course it’s always good for the oil and gas extraction industry,” said Scott. “Our state is one of the top states in the nation in oil and gas extraction employment.”
Scott added that economic growth nationwide could be hindered by Biden administration policies that likely will restrict domestic oil and gas production.
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