Gas Drops Below $2 in Some Cities

By Douglas A. McIntyre Published Mar 12, 6:16AM EDT

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Gas Drops Below $2 in Some Cities — © BraunS / Getty Images

U.S. oil prices have plunged recently at a rate greater than any time since 2014. This was partly due to an OPEC (particularly Saudi Arabia) battle with Russia on production levels. The plunge also was due in part to the fact that coronavirus will harm businesses enough worldwide that demand will be sucked out of the market. That process apparently already has started.

Gasoline prices are almost directly tethered to oil prices. Other factors, including taxes and refinery capacity, are important as well, but to a lesser extent. Most estimates are that oil prices are 60% of the price of gas. The cratering is great enough so that in some large cities, the price of a gallon of regular gas is already below $2.

Benchmark West Texas Intermediate (WTI) crude has had a breathtaking drop in just a few days, from $53 a barrel on February 23 to just above $32. That is a 40% sell-off in two weeks.

According to AAA, the price average price of a gallon of regular gas has dropped to just under $2.33 nationwide. That is down from $2.41 a week ago. If gas prices drop as much as oil prices, they will be well below $2 within a few weeks. Gas prices generally lag oil prices by several weeks, sometimes longer.

The price of gas in some cities, particularly those near the Gulf refineries south of Houston, has dropped well under $2. In Tulsa, it is $1.85 a gallon. In Oklahoma City, it has fallen to $1.90. The price in San Antonio is $1.91. In Dallas, it has fallen to $1.94. In Austin, it has dropped to $1.98. In Columbia, South Carolina, it has fallen to $1.93. As far north as Fort Wayne, Indiana, the price as dropped to $1.99.

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If the price of oil remains around $33 a barrel for several weeks, the price of gasoline will dive by Memorial Day, when driving in America hits one of its peaks. While that may make driving more affordable, the effect of the coronavirus already may have undermined the U.S. economy and restricted travel.

While $2 a gallon gas may be on the way, not everyone will be able to take advantage of it.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.