Unfortunately, I locked most of my fuel needs in a couple of weeks before prices really tumbled back in late-Feb. I thought I was really doing something when I made the move but little did I know the world was about to be turned upside down. Prices for gasoline in the wholesale and futures markets dropped on Monday as more states told residents to stay home to stop the spread of coronavirus, with more expected to follow in coming days. Some spot cash prices around the U.S. were down -40% or more Monday, and futures prices for gasoline in New York Harbor lost -24% for gasoline due for delivery in April. As a result, the prices drivers pay at the pump could fall by as much as -20% in a matter of weeks and in some areas, could reach sub-$1 a gallon in select markets. Gasoline futures in New York fell to 50.00 cents a gallon, the lowest level since the current contract started trading in 2005. The previous gasoline contract last traded that low in 2001… All of which means Americans – on average – can expect gas-prices at the pump to plunge very soon. “The reason is clear. No one is driving,” said Daniel Yergin, vice chairman IHS Markit. He said demand for gasoline could fall by about -50% during the coronavirus response period. Some believe demand has already fallen by as much as -25%. The last time gasoline was averaging less than $1 was back in 1999. Today, at the pump, consumers are still paying an average of about $2.10 per gallon for unleaded gasoline Monday. Andrew Lipow, president of Lipow Oil Associates, says his analysis shows that the U.S. spent $1.1 billion a day on gasoline. “I think this April we’re looking at $350 million a day. We’re going to be saving $20 billion on gasoline this month.” While low gas and oil prices are usually good for consumers’ pocketbooks, in this particular downturn nearly 40% of the country is stuck at home, meaning most consumers aren’t benefitting, though they could down the road. Some analysts think the ultra-low prices could stick around well into summer. (Sources: CNBC, Bloomberg)
