Gas approaching $1 a gallon at some locations

Bloomberg/Fuel Fix:

London, Kentucky, has become the first U.S. city to see pump prices fall below $1 a gallon as coronavirus-related lockdowns halt transit across the country -- and it won’t be the last.

Several others are poised to join the club in the coming days as the pandemic crushes fuel demand and sends the economy to the brink of a recession. While cheap fuel usually spurs gas-guzzling Americans to hit the highways, the latest downturn in prices portends dark times ahead.

“You almost can’t even give it away,” said Paul Bingham, head transportation economist at IHS Markit Ltd. “The price elasticity has totally changed. It’s full-on demand destruction.”

Nationwide, pump prices are headed for depths not seen since the Great Recession. Retail gasoline is expected to average $1.99 a gallon in the next 72 hours and fall as low as $1.49 by mid-April, the lowest level in 16 years, according to Patrick DeHaan, head of petroleum analysis at Gasbuddy.

The downturn comes as large swathes of the country are under containment orders in an effort to curb the virus that’s killed more than 15,000 people globally. U.S. unemployment is set to rise to 30% this quarter while the GDP may drop by 50%. In that environment, low gasoline prices won’t induce consumption in the way it typically does, and may instead be yet another indicator of a struggling economy.

Illinois could be next to see sub-$1 fuel, with Chicago wholesale gasoline selling at a record-low 20 cents Monday morning, Bloomberg data show. Gas stations in Ohio and Wisconsin are also possibilities if prices keeps falling, DeHaan said.

Pump prices are chasing gasoline futures lower. Futures in New York plunged 63% in March alone as coronavirus containment measures grip major U.S. cities, bringing the nation to an economic standstill. On average, about 28 cents in taxes and fees are added to the price of gasoline paid at the pump, according to RJO Futures, with the retail price typically lagging futures by about a week.
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I suspect we will see much more activity by people in the coming weeks.  The 15-day quarantine is likely to expire for big swaths of the US in the coming days in areas where the pandemic has not been as much of a problem as it has been in hot spots like New York, California, and Washington state.   Recent reports indicated that there were 200 Texas counties where there were no cases of Coronavirus and the same is likely true for several other states.

The biggest outbreaks seem to be in areas with high-density populations and public transportation that pushes people together.  More rural areas are not seeing as much.  The limited outbreak in Texas also seems to be in the big cities like Dallas, Houston and San Antonio.