Gas is cheap, but few driv­ers have any­where to go for now

Re­tail prices at low­est point in four years, with more de­clines as­sured

Richmond Times-Dispatch - - MONEY & MARKETS | BUSINESS - BY DAVID KOENIG Busi­ness Ed­i­tor Gre­gory J. Gil­li­gan con­trib­uted to this re­port.

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.

THE ASSOCIATED PRESS

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.

LISA SCHAFFNER

Gas was sell­ing for less than $1 a gal­lon at sta­tions along U.S. 60 in Cum­ber­land County on Sun­day.

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