An ever worsening crude oil glut has led to sharply falling prices at the gas pump. But not everyone’s enjoying the savings.
Few people are driving because of shelter-at-home orders in response to the coronavirus pandemic. And that’s fueling the glut.
The result is sub-$2 gas prices across the country, according to AAA, the Auto Club Group. Florida rang in its lowest average gas prices in four years Monday at $1.81 per gallon. That’s the lowest daily average price since March 2016.
It matched the national average.
And pump prices were even lower locally — Tampa Bay averaged $1.74 per gallon. According to Mark Jenkins, spokesman for AAA, 99 percent of Tampa Bay gas stations had prices below $2. Across the state, 94 percent of gas stations were offering gas for less than $2. Even Florida’s most expensive markets (West Palm Beach and Gainesville) averaged $1.99 per gallon, AAA said.
Stay-at-home orders aimed at halting the spread of COVID-19 are causing people to limit driving to essential errands. The drop in demand is leading to strange happenings in the wholesale oil markets.
On Monday, some crude oil futures fell below zero for the cost of a barrel.
“It’s unheard of,” Jenkins said. “It’s never happened before.”
The decline in demand has been compounded by the lack of space to store the extra oil that’s being produced. Not enough is being consumed to clear room for more.
“Right now the way it stands, those who have oil would need to pay the buyer to take it off their hands,” Jenkins said.
Analysts with S&P Global Platts, a commodities analysis firm, described the price movement a short-term anomaly, according to a report from business news service Bloomberg.
And while the Organization of Petroleum Exporting Countries reached an agreement with Russia last week to reduce production by about 10 percent, there is still more oil being produced than is being used.