Dan Salaja was a teenager with a new license last time he remembers gas selling for less than a dollar a few decades ago.
“If I was a betting man, I would have bet a large amount of money we’d never see gas for less than a dollar again,” said the manager of Casey’s General Store in Wautoma, Wisconsin.
But Salaja’s store is selling gas for only 92 cents a gallon. And nearly 10% of stations across the state are also below $1 a gallon.
Sub-$1 gas is still relatively rare nationwide. Only about 425 stations out of 130,000 US stations were selling gas for pennies on Tuesday, according to data from the Oil Price Information Service.
But the number of locations with cheap gas is climbing— it’s up from only about 100 stations a week ago. And gas for about a dollar is more common: roughly 1,300 stations are at $1.05 a gallon or less.
And most of the country — about 75% of the nation’s stations — are selling gas for less than $2, a radical shift from the start of the year when virtually every station was selling gas for more than $2. The national average stands at $1.84, according to AAA, down from $2.26 only a month ago, and nearly a full dollar cheaper than this same time a year ago.
With most of the country and much of the developed world on shutdown due to the coronavirus pandemic, oil consumption has plunged worldwide, taking oil prices along with it.
Oil futures were trading for less than $20 a barrel Wednesday morning. And while gas prices haven’t fallen as much as oil yet, they’re likely to continue to fall, said Tom Kloza, chief oil analyst for OPIS.
“Gasoline prices in the United States are going to move lower the rest of this month and into May,” he said. “I’d say there’s a 50-50 chance we hit $1.25 as a national average.” If that happens, it’ll be the first time since March of 2002, in the months after the 9/11 attack, that the national average price has been that cheap.
The last time the national average fell below $1 was in 1999, according to data from OPIS, which tracks gas prices for AAA, ans the low for this century was $1.09 reached in December 2001. But Kloza doesn’t think the coronavirus crisis will push prices that low.
But even if the national average only falls to $1.25, as Kloza predicts could happen, that will likely mean more than 25% of stations overall will be charging less than a dollar a gallon.
Wholesale prices in parts of the United States are down to about 20 cents a gallon. Gasoline taxes, distribution fees and retail markups are what’s keeping prices as high as they are. Margins for gas station owners are typically only a few cents a gallon, but many are raising that margin to make up for the drastic drop in gasoline and other sales.
The cheap gas probably isn’t doing much to spur demand.
Salaja said that he’s seeing some customers come in to fill up boats or RVs or gasoline cans to take advantage of cheap gas ahead of the summer in hopes they’ll be able to use it then. But gas doesn’t keep more than a couple of months. And for the most part, the cheap gasoline and the sharp drop in sales are bad news for gas station owners, no matter what margin they are able to get right now.
“Sub-$2 or sub-$1 gas will not bring back the Sunday drive or commuting,” said Jeff Lenard, spokesman for the National Association of Convenience Stores.