GRAND RAPIDS, Mich. — The price of gasoline continues to plummet as the coronavirus pandemic plays out, but one industry analyst says there may be a day of reckoning at the pumps.
“If prices remain this low, it’s going to undermine our energy independence and could lead to a slingshot in gas prices down the road,’’ said Patrick DeHaan, head of petroleum analysis at GasBuddy.
DeHaan says the average price for a gallon of unleaded regular gasoline in Grand Rapids is $1.63; the statewide average is $1.59.
Stay at home orders in Michigan and elsewhere has sent demand into a nosedive. And that is being reflected at the pumps. Gasoline prices have continuously dropped nationwide since Feb. 20.
“Gasoline demand has plunged and that means suddenly there’s a huge disconnect between supply and demand,’’ DeHaan said. “Across the country, millions of Americans are sheltering at home, not going to school, not going to work.’’
Motorists are paying an average of $24 for a full 15-gallon tank of gasoline, a discount of $20 from when prices were their highest last July, AAA said in a news release.
“As more Americans practice social distancing, gas demand is likely to continue decreasing and push pump prices lower,’’ said Adrienne Woodland, spokesperson for AAA – The Auto Club Group.
DeHaan says oil producers are already feeling the pinch. Whiting Petroleum Corp., headquartered in Denver, last week filed for bankruptcy protection following the crash in oil prices.
“So that’s the risk here; if prices remain so low for so long, oil companies will go belly-up,’’ DeHaan said. “And then U.S. production numbers fall and that leaves us more susceptible to global producers.’’
GasBuddy is a travel and navigation app that is used by millions of drivers to save money on gas. GasBuddy says it is possible that hundreds of stations will push their price to 99 cents per gallon for the first time since the early 2000s.
“We are probably looking at our best chance for prices to remain this low for the longest period of time since potentially 2003 or 2004,’’ DeHaan said. "The lower you go for longer, the more potential there is for a slingshot once everything returns to normal.''
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