U.S. consumers are paying record levels for gasoline according to the Energy Information Administration (EIA). Average gasoline prices across the country are $3.17 per gallon, up 45.7% since last year, and are currently at a 7-year high.
Even with oil prices hovering around $70 per barrel, demand for gasoline has also recovered from pre-pandemic levels. According to the EIA, gasoline demand is approximately 9.1 million barrels per day (bpd), up from 5.8 bpd in May 2020.
Last week, The White House recommended that OPEC increase oil production to curb gasoline prices for consumers.OPEC has already announced a series of production increases in July which will increase production by 400k bpd starting in August.
Using Refinitiv Datastream, we can go one step further to assess how much spare capacity OPEC currently has today. Looking at Exhibit 1, OPEC oil production capacity in August is 33.5m bpd. However, of that capacity, only 27.8m bpd is currently being produced, which results in approximately 5.7 million bpd that is currently offline.
Exhibit 1: OPEC Production Capacity vs. Supply
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