Kentucky professor explains how OPEC decision could affect Kentuckians

It's not just oil prices the cut could affect. Herrera says there are also energy and inflation costs to consider

LEXINGTON, Ky (WTVQ)- Gas prices could be on the rise after the OPEC+, the Organization of Petroleum Exporting Countries, announced plans earlier this week to slash production by up to two million barrels per day in November.

According to OPEC leaders, the reason they’re choosing to cut production is because of the uncertainty that surrounds the global economic and oil market outlooks.

Associate Chair of University of Kentucky’s Department of Economics explains, while gas prices might go up, there are some reasons to be hopeful.

“In the true and reality is that likely, the cutting the production will be half a million or maybe a million barrels per day,” said Ana Maria Herrera, who is also a professor at the university.

Herrera says because of the reduction, Kentuckians could see gas prices continue to rise through the end of the year.

“It’s going to go up. It’s going to hit consumers budget. Households are going to have to spend more on gasoline, firms are going to have to spend more on transportation so that means you’re going to have to tighten your belt a little bit,” said Herrera.

The professor says Kentucky isn’t seeing as big of an increase in gas prices like some other areas of the country, which are experiencing additional problems.

“One of the things that has happened is if you look at California and the Great Lakes area, there’s been some issues with the refineries. The prices in those areas, those actually spiked and are really high,” said Herrera.

It’s not just oil prices the cut could affect. Herrera says there are also energy and inflation costs to consider.

“There’s a lot of pressure now from inflation. Central banks are trying to control inflation. That might slow down the global economy, decreases demand, demand in the full and demand in the winter for gasoline is not as high,” said Herrera.

But Herrera points to some good news, saying there’s no reason to panic because nothing is certain right now. She adds that eventually inflation prices will go down.

“On the other hand, the economy has been growing at an amazing pace. Prices of other goods are increasing much more than gasoline prices,” said Herrera.

She also pointed to a strong labor market with more jobs being added.