In some states, oil-price collapse brings back 99-cent gas

Source: By Dino Grandoni, Washington Post • Posted: Thursday, March 26, 2020

Gas prices are listed at $1.239 for unleaded and $1.739 for premium at a Sam’s Club gas station in Oklahoma City on Wednesday. Rising stockpiles and lowered demand are contributing to the low prices. (AP Photo/Sue Ogrocki)

It happened at one in Kentucky. Then at another one in Tennessee. And then at four more in Oklahoma.

A handful of fueling stations across the country are bringing back something that hasn’t been seen since the days of big hair and brick phones — 99-cent gasoline.

Nationwide, the price at the gas pump has plummeted as normally car-crazy Americans stay off the roads and in their homes to avoid spreading the novel coronavirus, which has already killed more than 19,000 people around the world.

That decline in demand — along with a vicious production war between Saudi Arabia and Russia triggered by the viral outbreak — is sinking gas prices to levels reminiscent for some drivers of the 1980s.

“It’s captivating,” said Patrick DeHaan, a petroleum analyst at GasBuddy. “It’s just memory-provoking of a time when it was a lot more affordable at the pump.”

Last week, a BP station in London, Ky., was the first to post a price below $1 a gallon. It was followed Wednesday by four stations in Oklahoma City along with another in Paris, Tenn.

Jay Sukhadia, owner of the Patriot Express Mart in northwestern Tennessee, said he saw a 50 percent increase in customers after cutting his price below a dollar, with some driving for more than two hours from Memphis and Nashville to fill up.

“There’s been a line down the road,” Sukhadia said, noting he is able to keep his prices low by maintaining a thin profit margin. “It’s like Six Flags right now.”

So far, sub-$1 prices have only been seen in a select spots across the United States where fuel taxes are low. Overall, the national average for a gallon of gas on Thursday morning was $2.03 — down from $2.41 at the beginning of the month. In expensive fuel markets such as California, the price at the pump is still well above $3.

Still, fuel prices could fall even further as the broader economic downturn takes hold, and “ultimately bottom out” at $1.49, DeHaan said. The last time any part of the country saw sub-$1 gasoline, according to DeHaan, was in 2016 — though back then it happened fleetingly at just one gas station in Iowa.

While the drop in the price of oil may be a boon for some motorists, it has been a crushing blow to workers in the oil sector in places like West Texas and North Dakota, along with related construction and manufacturing businesses, who have endured boom-and-bust cycles before and already seeing layoffs this time around.

“There’s an enormous amount of unemployment that flows from that,” said Paul Bingham, a trade and transportation analyst at IHS Markit. “So from that portion of the economy, it’s really in free fall and in crisis.”

“Drillers, frackers, excavators, builders and haulers all face the consequences of a simultaneous price war and a collapse in demand for the oil they extract from the Bakken Formation deposits,” Will Englund writes of the effect of low oil prices in North Dakota. “So do restaurant workers, janitors, checkout cashiers and college professors.”

The Trump administration has tried to step in to stop the bleeding by purchasing oil to refill the nation’s Strategic Petroleum Reserve and, in some cases, waiving regulatory compliance for oil refiners and other businesses impacted by the pandemic. And the United States plans to use the upcoming virtual Group of 20 forum to urge Saudi Arabia to restrain its planned oil production boost, the Wall Street Journal reports.

But so far, those effort have been a drop in the bucket in the overall ebb and flow of the global oil market. A barrel of Brent crude, which traded at $66 at the start of the year, was down to just $30 Thursday morning.