Wholesale gasoline prices are collapsing, a sign that more refineries will cut back and prices at the pump could sink to under $1 a gallon in more places.
Gas prices at distributors are falling fast as the U.S. gasoline supply grows and demand has been cut in half due to stay-at-home orders.
Prices for a gallon of gas drop below $2.00 at a Gulf service station on April 08, 2020 in Farmingdale, New York.Wholesale gasoline prices are collapsing, a sign that more refineries will cut back or shut down and prices at the pump could sink to under $1 a gallon in more parts of the country, analysts said.
"I'm pretty sure these wholesale prices and spot prices are as low as anything we've seen since before the Arab oil embargo" in the early 1970s, said Tom Kloza, head of global energy analysis at Oil Price Information Services. "I think you are going to see much more common sub-$1 gasoline prices in the nation's midsection, and I think we are looking at a national average of $1.25 to $1.50" at the pump.
Government data shows that drivers used just 5.1 million barrels a day last week, well below the 9.8 million barrels a day at the same time last year. Kloza said the U.S. drivers last consumed that amount in 1968. "When you see these discounts and you see these numbers, that tells you they can't clear gasoline," said Kloza. "In the country's midsection, there is too much gasoline. There is more than 50 days supply there, and they are going to cut refinery runs."
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