The spread of the coronavirus first diagnosed in China has undercut world oil prices. China is the world’s largest oil importer, and its economy and some of its major industries have slowed. Experts believe that if the disease continues to spread, China’s gross domestic product growth could be severely undermined. One byproduct of the trouble is a drop in gasoline prices in the United States. In some states, it is barely above $2 a gallon.
The price of West Texas Intermediate crude was almost $65 a barrel a month ago. It has dropped to $50 in recent days, near a one-year low. While OPEC and some of its partners have discussed production cuts to buoy the price, this has not happened yet.
The price of a gallon of regular in the United States is $2.46 nationwide, down from $2.59 a month ago. However, in several states it is much lower and falling. According to GasBuddy, the price is under $2.12 in several states, including Louisiana, Mississippi, Missouri, Oklahoma and Texas. It is under $2.20 in Alabama, Arkansas, Kansas and South Carolina.
Most of the states on the low gas price list also have low state gas taxes and levies. However, as prices continue to drop in other states, the tax ratio to total gas prices will become less important.
What is bad for China today has a benefit in the United States. Gas prices can be a large part of family annual expenditures, particularly for people with low and middle-class income. While the U.S. economy may be slowed by a drop in China’s imports from America, the benefit remains.
Gas prices are headed toward $2. If a pandemic develops, they will reach there soon.
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