HOUSTON – The Saudi Arabia led OPEC announced plans to cut oil production. It’s the third time the group has done so. In April, it cut 1.6 million barrels per day, which came after cutting two million barrels in October 2022.
The cuts are expected in July.
UH Downtown Assistant Professor of Business Dietrich von Biedenfeld said he “absolutely” expects gas prices to increase. According to his bio on the university website, his research focuses on “legal, regulatory, economic, sustainability, and supply cycle concerns for water rights, procurement, compliance, ethics, and leadership topics.”
“It’s going to mean that those local gas stations, those pumps either are going to increase prices or you’re going to see more of that plastic on there saying, ‘we simply couldn’t adhere at a price where we could recoup so we’re not going to refuel until next Tuesday,’” he explained.
Drivers like Lloyd Hayes said he’s already adjusting his daily routine to manage current prices.
“I never put it all the way,” Hayes said. “I just try to at least put it about half a tank depending on how far I have to travel that week.”
Von Biedenfeld said no one lives paying more at the pump but as prices go up it does help the Houston economy.
“That’s excellent for many of the shareholders for some of these oil companies. It’s also beneficial for job retention,” he said. “As long as there are Texas workers who are needed at these drilling sites, as long as there are Texas workers that need to monitor the various procurement processes, the shipping and logistics maritime of these things that’s great for the Texas economy particularly the Houston region.”
He explained it as a “circular” benefit because employees at oil companies may have lunch at a local restaurant, go to the zoo on the weekends, live and pay taxes in the Houston area.
“We create a circular sort of benefit in this region that doesn’t translate outside of this area,” von Biedenfeld said.
The U.S. exports close to 10 million barrels of oil per day, according to the chief economist, Dean Foreman, at the trade organization, Texas Oil and Gas Association.
“We’re seeing record amounts of exports so far this year; both crude oil and refined products,” Foreman said.” As a result of that, Texas, as a whole, tends to benefit constructively from prices as they go up. Even though from a consumer standpoint, it’s offsetting and the higher prices tend to slow.”
But Hayes said people like him don’t benefit.
“A lot of people still hurting. The economy is really high,” Hayes said. “You go into the stores, food is high. Everything is higher right about now.”