Average gas prices at the pump could fall below $ 2 a gallon in the United States if producers such as Saudi Arabia flood the market for cheap oil as part of current production, analysts said.
The plunge started after Russia rejected an OPEC proposal to cut crude oil production by 1.5 million barrels a day. In apparent retaliation, Saudi Arabia lowered prices for buyers over the weekend. This came after concerns about coronaviruses had already started to depress demand for oil used in transportation.
In the basic economy, high supply and lower demand tend to drive prices down. In this case, much lower.
“Pump prices are expected to decrease until the end of the winter driving season, particularly amid concerns over the coronavirus that is driving down the price of crude oil,” said AAA spokesperson Montrae Waiters – The Auto Club Group, in a statement.
Let our news respond to your inbox. The news and stories that matter, delivered in the morning on weekdays.
The current national average price for a gallon of gas is $ 2,381, according to AAA. A month ago, it was $ 2,435.
“We have already seen gas prices drop since February 20,” wrote Allison Mac, an analyst with price monitoring company GasBuddy.com. “Now, with the discounts on the price of Saudi oil and without reducing oil production, the world is inundated with oil while demand is among the weakest we have seen. It only means that gas prices continue to drop more dramatically, until something changes. “
But other experts warned that it was too early to say where and how the price cuts would happen.
“Falling oil prices will translate into savings at the pump for American consumers. But when and how much will depend on when low-cost fuel enters the petrol station’s tanks, and given the current disruptions in world trade and supply chains, nothing can be taken for granted, ”wrote Greg McBride, Chief Financial Analyst for Bankrate.com.
“Some stations may drop prices right away for competitive reasons, but any significant impact on consumers’ portfolios will require lower prices to continue in the spring and summer,” McBride wrote.
Ohio gas stations in the Cleveland area already display signs indicating regular unleaded for $ 1.86 to $ 1.99 per gallon.
At a Sheetz gas station about 30 minutes south of Cleveland, manager Jen Raskow said she was grateful that the exterior facade was electronically controlled by head office. In this way, she and her employees would not have to be at the forefront with a pole constantly changing prices.
But as a driver, she said she didn’t pay too much attention to the price, except to bring her gasoline closer to her workplace rather than her home, where it is more expensive.
“I have to travel more than 160 kilometers to work every day,” said Raskow. “No matter the price, I have to refuel.”
