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Oil’s ‘Coronavirus Crash’ Sends Gas Prices Below $2 – But There’s a Catch

Last Updated September 23, 2020 1:38 PM
Simon Chandler
Last Updated September 23, 2020 1:38 PM
  • You can now buy a gallon of gas for less than $2 in many U.S. states.
  • A price war between Saudi Arabia and other producers has caused this plunge.
  • But with the coronavirus underlying the fall, people will have less need to drive.

If the deadly coronavirus outbreak has a silver lining, it may be gas prices. Because in a growing number of U.S. states, a gallon of petrol is now approaching prices last seen at the beginning of the 21st century.

Gas prices have fallen below $2 per gallon in many regions. Unfortunately, the very trigger that caused oil prices to crash threatens to prevent you from taking advantage of this unexpected discount in the weeks and months ahead.

Oil Price War Causes Gas Costs to Crater

gas prices below $2 per gallon
Gas prices are falling below $2 per gallon throughout the U.S. | Source: kabby/Shutterstock.com

In Oklahoma City, GasBuddy data indicate that you can buy a gallon of gas for as little as $1.67 . Oklahoma would appear to be the cheapest state for gas prices at the moment. But a handful of other states also boast sub-$2 gas prices per gallon.

In Albuquerque, New Mexico, the gas price ranges as low as $1.87 . Much the same goes for Texas, Missouri, Louisiana, Mississippi, Alabama, Tennessee, and South Carolina, where you can buy for under $2.

Multiple factors have converged to drive gas prices to their lowest levels in 20 years. The coronavirus outbreak ignited a slump in demand for oil . That prompted a response from OPEC – which failed to reach a deal.

Saudi Arabia slashed its prices on Sunday , kicking off a price war that drove crude as much as 30% lower .

Why Consumers May Not Benefit from Insanely Low Gas Prices

This may be scary for oil producers, but U.S. commuters are already overjoyed by the news.

Gas prices in wake of coronavirus tweet
Source: Twitter 

It’s not difficult to understand why.

According to the U.S. Department of Energy, we haven’t seen prices this low at the pump since the beginning of the 21st century.

U.S. gas prices over time
Gas prices are plunging to 20-year lows. | Source: U.S. Department of Energy 

Back in 2004, prices were $1.88 per gallon. Just six years earlier, prices ranged as low as $1.06. We still have some way to go before we reach this level. But with the coronavirus spreading throughout America, and with the government struggling to halt its growth, it’s likely that gas prices will fall further.

Is this good news? Not really.

Yes, you can currently fill up the tank on the cheap. But if coronavirus continues to spread, there’s a good chance you’re going to need to fill your tank up less often too.

Just look at Seattle.

With the toll currently at 19, Washington State has more coronavirus deaths  than any other state in the U.S. And traffic has all-but dried up in Seattle, the state’s largest city. Health officials have advised citizens to stay at home, and most of them have. As one resident told ABC News :

Seattle is literally a ghost town — traffic does not exist.

Expect a very similar picture in other American states. Gas prices will plunge. But mainly because demand will crater too.

Increasing numbers of people will be telecommuting to work. And others – like U.S. Senator Ted Cruz  – will be self-isolating. And forget about travel-related consumption .

Consequently, for many consumers, the fall in gas prices may be almost irrelevant.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.