The national average price of gasoline has plunged below $2 per gallon, and the freefall is not likely to stop there.
With the coronavirus pandemic crunching the economy, a precipitous drop in the price of crude oil has sent gas prices plummeting at a time when they’re usually rising in the lead-up to the summer travel season.
The national average fell below $2 on Tuesday for the first time in four years, according to AAA. The national average of $1.997 was about 11 cents cheaper than a week ago and about 69 cents cheaper than a year ago.
AAA projected the national average would hit $1.75 or less in April.
Normally, prices like that would spark a travel binge.
But most drivers won’t be able to take advantage of it since a majority of Americans are under some form of stay-at-home order, limiting their driving to essential needs.
“Americans are staying at home at a time when they’d probably be filling up more and considering more road trips because of cheap gas,” AAA spokesperson Jeanette Casselano said. “They’re not necessarily reaping all the benefits of these savings at pump.”
Roughly 100,000 stations are charging less than $2 per gallon and 29 states are averaging less than $2, according to fuel-savings app GasBuddy, which tracks prices.
A few are even charging less than $1, including stations in Oklahoma and Wisconsin. The nation’s lowest price was 95 cents at a station in Wautoma, Wisconsin, according to GasBuddy.
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Patrick DeHaan, head of petroleum analysis at GasBuddy, said he does not expect the national average to fall below $1 per gallon. But he does expect it to fall another 35 cents to 50 cents in the coming months.
“I think it’s reasonable that we get under the lowest level that we saw during the great recession,” DeHaan said. “I think that’s where we’re going.”
There are two key catalysts that are intertwined:
• The price of oil has plunged to the $20 range, down about two-thirds from early January, in part due to a global economic slowdown and in part due to a dispute between Saudi Arabia and Russia that has led to a surplus of production. Oil prices are trading at an 18-year low, according to the Oil Price Information Service.
• Demand for gasoline has fallen off a cliff as Americans stay home, recently prompting federal regulators to extend by several weeks the deadline for stations to switch from winter-blend gasoline to the more expensive summer blend.
“By all metrics we’re all staring out the window looking at it and hopefully few of us are filling up with it,” DeHaan said. “We’re showing demand just a figment of its normal self.”
Even in California, which usually has the most expensive gas of the contiguous states, prices are falling.
The average price in California was $3.04 on Tuesday, down 14 cents from a week ago and down 57 cents from a year ago.
California’s average will soon fall below $3 and could be headed below $2 before the crisis subsides, DeHaan projected.
The plunging price of oil is certain to lead to massive losses, including likely job cuts, for the U.S. oil and gas sector, DeHaan said. With prices that low, many drillers and oilfield service companies can’t turn a profit and will go out of business.
Eventually, though, production cuts will likely lead to price increases, analysts said.
“Paradoxically, this will ultimately create an inflationary oil supply shock of historic proportions because so much oil production will be forced to be shut-in,” Goldman Sachs analyst Jeffrey Currie said Sunday in a research note.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.