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Oil Prices Go Negative. But What About Gas Prices?
April 21, 2020
Monday oil prices went into the negative for the first time in history. The price of US crude dropped nearly $56 per barrel or 30% to settle at -$37.63 per barrel. But that won’t necessarily mean big savings at the gas pump for consumers, according to travel group AAA.
The one-day drop is the largest on record dating back to 1983. The final price is far below the previous all-time low of $10.42 per barrel set on March 31, 1983.
The unprecedented drop comes as the global crude supplies begin to backup with nowhere for it to go. Fuel demand is down due to COVID-19 and storage facilities are at or near capacity.
“This doesn’t mean gas prices will go into the negative too,” said Mark Jenkins, spokesman, AAA – The Auto Club Group, on Monday. “Gasoline futures only lost 4 cents today. That’s because gasoline supplies are being throttled down. While three North American refineries have closed, others are reducing their production rates. Currently the state average is on track to eventually slip into the $1.40s, but this remains a very fluid situation, as with everything else during this pandemic.”
Comments
7 Responses to “Oil Prices Go Negative. But What About Gas Prices?”
REGARDING:
“CRUDE AND COAL FOREVER !!!!”
I like trees. Planted a bunch of chestnut trees…or at least moved the seedlings to grow in pretty rows. Don’t hug them, though. My squirrels like them…pr am I their human?
(We need to genetically reengineer chestnuts to do away with the burrs, though….and the tassel smells.)
Still, nuclear is way safer than coal.
David for fast nuclear with pyrometallurgical reprocessing
All you tree huggers are loving this. As for me I can’t wait til they fire those refineries up. I love the smell of crude in the morning, it smells like an economical comeback.
CRUDE AND COAL FOREVER !!!!
Good then there is no need to keep drilling it. Move on and let the dinosaur die.
Well all I see are thousands who have lost their jobs and may never get them back. But at the same time …I did fill all my gas cans in prep for hurricane season.
Oil touched and even went under zero in price for the first time ever. When the oil price went that negative (briefly), it did not mean a gas station will start giving you gasoline for free or perhaps pay you to take the fuel. The precipitous drop had to do with an extremely rare circumstance in the world of commodity futures. A handful of traders (perhaps a hedge fund or major investment bank) had to exit contracts right before the end of the month expiration. That had to do this no matter what, since they could not actually take physical delivery of the oil. Seller without any buyers to step up and trade. Further, there is literally no place to put oil for storage right now worldwide. They keep pumping oil but the demand is extremely low with no place to store it. While the world is awash in cheap oil, it won’t be free: ever. Further, the price of oil is back higher for the months of June, July and August in the commodities world. The good news is gasoline will be very cheap for a while and gradually work its way back up as the economy opens up.
I wouldn’t want negative gasoline prices, for a couple of reasons. First, it’s impractical- what would you do? Pump the gas for free, then go inside and get the refund from the store clerk? Second, if such a concept was reality, do you know how many convenience stores would shut down? Is that good for the economy? I would like to see gas go down to around $1-97¢ range. That sounds about where it should be, given the circumstances. The whole business of “up like a rocket, down like a feather”, however, is a Crock.
Anything to keep cost up even when people are not able to work. DOes that telly ou what BIG BUSINESS is about. Draining your pockets.