COVID-19 Outbreak Causes Gas Prices To Tumble
Coronavirus-related social distancing and a price war between Saudi Arabia and Russia means lower prices at the pump for drivers in the United States. Experts estimate the country's average price for a gallon of gasoline could dip to less than $1.50.
States like Kentucky and Ohio are enjoying gas prices of less than a dollar per gallon. Even California, which has the highest gasoline price per gallon in the nation, is feeling some relief at the pump.
"99c/GAL? Not everyone will see it, but everyone will hear about it when/if it happens. 99c/gal looks likely to show up in the next few weeks. Looks nice, eh?" tweeted Patrick De Haan, an oil and refined products analyst.
Current gas prices are at the opposite end of the pendulum from 2011, when the nation's fuel prices peaked at around $3.80 per gallon.
Experts attribute two causes to falling gas costs: The COVID-19 outbreak and a price war between Russia and Saudi Arabia.
The COVID-19 outbreak has lead to mass quarantines and shelter-in-place mandates, thereby reducing the demand for gasoline. With many businesses shuttered, Americans are driving less, putting downward pressure on demand.
Simultaneously, Saudi Arabia slashed prices on its crude oil. This has analysts expecting a surplus in the supply chain, with some even suggesting prices will fall further as companies run out of room to store surplus oil.
"Recently, the rulers of Saudi Arabia and Russia decided to ramp up production in their nationalized oil industries in the hope of crashing oil prices and driving private oil-producing companies in the United States out of business. They literally flooded the market," economist Dr. Mark W. Hendrickson wrote for CNS News.
"The resulting glut exerted enormous downward pressure on gas prices. Then, on top of surging supply, demand for gas in the United States went into free-fall as a result of coronavirus-induced restrictions on economic activity, and indeed on movement itself. Prices could do nothing other than crash under those conditions," he said.
Want to see what gas prices are like near you? Check out this heat map from GasBuddy.com.