Gas is cheap, but few drivers have anywhere to go for now
Retail prices at lowest point in four years, with more declines assured
U.S. gasoline prices have dropped to their lowest levels in four years, and they are almost sure to go lower as oil prices plunge.
Price-tracking services put the national average Monday at around $2 a gallon.
The average price in the Richmond area was $1.81 per gallon on Monday, according to the motorist club AAA. The average price in the region was $2.15 a gallon a month ago and $2.41 a year ago.
In Virginia, the average price was $1.85, down from $2.22 a month ago and $2.44 a year ago.
AAA put Monday’s national average for gasoline at $2.01 a gallon, down from $2.69 a year ago. GasBuddy said it was $1.99.
Both prices were within 20 cents of lows set in early 2016 and late 2008, according to government figures.
Some stations across the country, including gas stations along U.S. 60 in Cumberland County, were spotted charging under $1 for a gallon of gas. But don’t expect a stampede to the pumps.
Demand is weak because so many Americans are under shelter-in-place rules and businesses have been shuttered because of the coronavirus outbreak.
“For most Americans who are home practicing social distancing and not driving to work or taking their children to school, you are only filling up maybe once a week, maybe every couple of weeks,” said Jeanette Casselano, a AAA spokeswoman. “You are not reaping the benefits.”
Prices have plenty of room to keep falling — maybe below $1.50, according to analysts.
Patrick DeHaan, an analyst for price tracker GasBuddy, said that, eventually, retail prices will reflect the even faster decline in wholesale prices.
“Retailers are taking their time lowering prices because they have a lot of uncertainty around the corner,” said DeHaan, adding that the practice boosts service station profit margins. “We’ve never seen gasoline retailers doing as well as they are now.”
Investors expect weak demand to continuing pushing gasoline prices lower. Contracts in New York for gasoline futures plunged to well under $1 a gallon on Monday.
Oil accounts for about half the price of gasoline, and the drop at the pump is shadowing the steep slide in crude, which on Monday briefly hit 2002 levels.
Benchmark prices for U.S. and international crude have both fallen by more than half in the past five weeks, as more Americans and Europeans have come under lockdown, cutting into demand for oil, and Saudi Arabia and Russia engaged in a price war.
Falling prices are likely to lead to less production in the Permian Basin of West Texas and New Mexico and other U.S. oilfields. Chevron is cutting back spending in the Permian, where shale drilling has turned the U.S. into the world’s biggest oil producer.
Julio DeJesus pumped gas for 98.9 cents a gallon in Cleveland on Monday. Prices have plunged on expectations that the economy will burn less fuel.
Gas was selling for less than $1 a gallon at stations along U.S. 60 in Cumberland County on Sunday.