LAFAYETTE, La. (KLFY) – Right now customers are paying $1.99 for a gallon of gas, but after OPEC announced a cutback in production customers could be paying more at the pump, and the oil and gas industry could see some positive changes.
Wednesday OPEC agreed to cut back in production, which will help reduce the surplus of oil. The agreement is to cutback 750,000 barrels of oil a day. Leaving many wondering what this means for the local economy.
UL-Lafayette Professor of Economics Anthony Greco said the cutback means higher prices.
“With people who depend on that for their livel-hood you’d want the price to go up, but, of course, as concumers, you like to have that low price at the pump. The barrel will go up and we could see that reflected in the price at the pump going up, yes. It may take a while to unfold, perhaps the rest of the year we won’t see much change, or a slight increase in price.”
Louisiana Oil and Gas Association Vice President Gifford Briggs said the question now is will OPEC hold up their end of the deal?
“We can be hopeful that they are going to be reducing. Look, 750,000 barrels out of the oil market significantly reduces the gap between supply and demand and should put pressure on pricing provided that Iran and or other countries don’t increase their productin by the same amount,” said Briggs.
As for Acadiana, Briggs said it’s a wait and see process.
“As countires are showing a reduction and we see that supply, the global supply, shrink by 750,000 barrels a day, that’s when I think the markets will really begin to respond.”
If OPEC holds up their end of the deal the industry could feel the affect of the cutbak in November.