Russia agrees to cut oil production, diesel continues plunge

| Monday, December 10, 2001

At the urging of OPEC, Russia agreed last week to cut oil production to help shore up slowing oil demand. The announcement comes as oil prices continue to plunge.

Russia, the world's second largest crude oil exporter, ended a showdown with the Organization of Petroleum Exporting Countries that threatened to unleash a price war. After the decision in Russia to cut production by 150,000 barrels per day (bpd), attention shifted to Norway, the world's third largest exporter of oil. OPEC has asked Norway for similar cuts.

OPEC agreed last month to curb output by 1.5 million bpd in January, if non-OPEC producers, such as Mexico, Norway and Russia, agreed to trim output by a total of 500,000 bpd. Mexico has since announced that it would cut oil exports by up to 100,000 bpd and Norway has offered to cut production by between 100,000 and 200,000 bpd. Other independent exporters, such as Oman and Angola, also have agreed to lower output. The proposed cuts put OPEC near its 500,000-bpd goal.

The weekly retail on-highway diesel prices released by the Energy Department Monday show the national average cost of diesel continues to drop. Diesel has decreased 36 cents since the Sept. 11 attacks to $1.173 per gallon.

The biggest price drop from last week was in California where fuel fell 5.3 cents per gallon to $1.247. The cost for a gallon of diesel in the state has plummeted 44 cents since mid September. The lowest prices in the nation are found in the Gulf Coast region. Fuel there dipped 1.3 cents to $1.129 per gallon. The highest prices are in the Central Atlantic region. Diesel there dropped 1.6 cents per gallon to $1.27. The cost of diesel declined about 2.6 cents per gallon in the New England region. Despite the reduction, the region claims the highest prices nationally. The remaining regions' price per gallon is as follows: East Coast, $1.186; New England, $1.314; Lower Atlantic, $1.139; Midwest, $1.174; Rocky Mountain, $1.169; and West Coast, $1.214, respectively.

Comments