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Gas Prices Hit Seven-Year High

(Karimala/Getty Images)

The national average for a gallon of gas rose to $3.22 on Wednesday, the highest price at the pump in seven years, according to AAA.

Some Americans, like those in California’s Mono County, are seeing prices of more than $5 per gallon. The blue state’s average price is $4.42.

Americans on average are paying more than $1 per gallon more than this time last year. West Texas Intermediate crude futures, the U.S. oil benchmark, traded around $77.60 per barrel Wednesday; one year ago, it traded around $40.

The rising cost comes after demand for petroleum products tanked in 2020 as a result of COVID-19 shutdowns. Though demand has since recovered, the supply remains constrained, according to CNBC. The supply chain issues have been worsened by Hurricane Ida, which knocked produced in the Gulf of Mexico offline. 

Despite rising demand and calls from consumers like the U.S. and India to increase supply, OPEC+, the coalition of oil-producing nations, decided earlier this week that instead of increasing output it would keep in place a previously agreed upon schedule to return 400,000 barrels per day to the market next month.

Sources reportedly told Reuters that the decision was driven by concern that demand and prices could weaken and also because the oil producers’ alliance, which saw income fall during the pandemic, is enjoying the increased revenue.

In April 2020, as the pandemic raged, OPEC+ brought in record production cuts of roughly 10 million barrels per day, or 10 percent of global output.

The Biden administration, meanwhile, has moved to substantially curtail domestic oil production, suspending new fossil fuel and oil drilling leases on public lands, among other policies.

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