Could Oil Supply Cuts Mean Higher Gas Prices

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Knoxville (WVLT) - Oil and gas prices are fluctuating as much as the weather these days.

OPEC has announced plans to cut production to ease a drop in oil prices.

However, light sweet crude for November delivery continued to drop on the New York Mercantile to $57.45 a barrel.

In mid-July, oil futures were trading for 78-bucks a barrel.

Now here's where AAA shows gas prices in the Knoxville area.

Regular on average is $2.11 Wednesday, a month ago, it was $2.51, and a year ago it was $2.86.

Gas prices we're seeing today are similar to those back in 2005. A UT economist says soon pump prices will begin increasing as OPEC limits supplies.

"What's likely to happen not so much for what OPEC does but because or rising demands for oil products as we go into winter we'll see gasoline prices coming back up. What OPEC is trying to do is to keep prices where there are, but they will come back up with greater demand," says Bill Fox, UT Economist.

The last time OPEC cut oil production was in December 2004.

UT Economist says limiting supplies works to keep prices up for a while but eventually the effort fails and prices drop.