Here is a copy of a news article about gas prices and why they dropped and are going back up.
By
Tim McDonnell
Climate reporter
March 3, 2021
The oil industry is
no stranger to boom-bust cycles, but the pandemic has been its wildest ride to date, and on March 4 it’s due to take another turn when
OPEC meets to consider rolling back production cuts.
As the world’s cars and airplanes idled, global oil demand
bottomed out in April at levels 16.4% below the previous year, dragging the price into negative territory for the first time. For the whole year, demand fell
an unprecedented 8.8% and still has a
long road to recovery.
White-knuckling through it all has been OPEC, the 13-member cartel that dictates quotas for most of the world’s biggest oil-producing countries (notably excluding the US). By tightening or loosening the world’s oil tap, OPEC effectively controls the price of the world’s most valuable commodity. The group has met regularly throughout the pandemic for members to butt heads over its central paradox: To sell less at a higher price, or sell more at a lower price.
At this week’s meeting, OPEC will be joined by ten “OPEC+” non-members including Russia and Oman, and will likely agree to increase production. By how much, exactly, is complicated by the fact that oil is currently above $60 per barrel, around where it was before the pandemic—but could easily crash again if the group hits the gas too hard. As Rystad Energy analyst Bjornar Tonhaugen put it in a research note: “In a high oil price environment, Russia will also have more sympathetic ears listening to its call for increasing supply, which will jilt the group dynamics away from the cautious approach led by Saudi Arabia which created the bullish environment in the first place.”
Here’s a look back at the oil market’s crazy year:
March 2020: As the global economy freezes up, Saudi Arabia and Russia
can’t agree on production cuts, and the price dips 30% overnight.
April 1, 2020: Prices fall below the level needed for
most US fracking companies to turn a profit, and Whiting Petroleum becomes the
first of hundreds to declare bankruptcy.
April 12, 2020: OPEC+ members
agree to a record cut of 9.7 million barrels per day through June, about 10% of global production.
April 20, 2020: The price of oil goes briefly negative for the first and only time in history.
May 2020: Global
oil storage facilities run out of space as producers find they can’t get rid of the stuff fast enough.
June-July 2020: As OPEC’s production cuts sink in, the price rises,
but stalls around $40. This is by OPEC design: The price is workable for members, but still too low for most US producers.
July 15, 2020: OPEC
agrees to roll back cuts through December to 7.7 million barrels per day.
Sept. 17, 2020: An OPEC committee
warns members not to skirt cuts, as Nigeria, Iraq, and the United Arab Emirates are blamed for overproducing.
Oct. 7, 2020: Thanks in part to the oil price crash, ExxonMobil, which lost
tens of billions of dollars over the year, is
surpassed by Florida utility company NextEra as
the top US energy company by market capitalization.
Nov. 9, 2020: Oil company stocks and the oil price
jump after Pfizer announces successful trials of a Covid-19 vaccine.
Dec. 3, 2020: OPEC+ members decide to
bring an additional 500,000 barrels per day back into production through March.
Jan. 5, 2021: Saudi Arabia backtracks and
volunteers to cut 1 million barrels per day, even as Russia and Kazakhstan forge ahead with increased production.
Feb. 8, 2021: The oil price returns to
pre-pandemic levels for the first time.
Feb. 11, 2021: OPEC forecasts that in 2021, oil demand will
recover a little more than half of what it lost in 2020. The forecast is 110,000 barrels per day lower than its earlier outlooks, as the slow pace of vaccination indicates a prolonged economic recovery.
March 2, 2021: US gasoline demand
rises to its highest level since the pandemic began. Gas prices have been rising for two straight months, a sign that supply cuts have paid off for producers.
OPEC’s meeting this week will show how close the group thinks it is to being out of the woods. Rystad’s Tonhaugen thinks another 500,000 barrels per day increase is likely—even though, he writes, that kind of bump will probably cause the price to dip yet again.
