OPEC production increase may not be enough

Despite the decision by the Organization of Petroleum Exporting Countries (OPEC) to increase oil production levels by 500,000 barrels a day (b/d), diesel fuel prices may continue to rise for some time. The price per barrel of oil has jumped to more than $34 due to a month-long strike by Venezuela's oil industry, and fears of war with Iraq were compounded by OPEC's plan to cut oil production by 1.7

Despite the decision by the Organization of Petroleum Exporting Countries (OPEC) to increase oil production levels by 500,000 barrels a day (b/d), diesel fuel prices may continue to rise for some time.

The price per barrel of oil has jumped to more than $34 due to a month-long strike by Venezuela's oil industry, and fears of war with Iraq were compounded by OPEC's plan to cut oil production by 1.7 b/d starting January 1. That helped push the average price at the pump for a gallon of diesel in the United States nine cents between December 16 and 30.

However, experts warn that OPEC's decision to raise production levels may not keep a lid on diesel fuel prices in the near future.

Venezuela, the world's fifth largest oil producing nation, has ceased exporting oil, taking 2.86 million b/d worth of oil off the world market. Iraq, which is embargoed from exporting oil, represents another 2.4 million b/d worth of production that is not available.

The U.S. alone uses over 20 million b/d of oil, experts said, with imports representing 58% of that total.

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