BOISE, Idaho — The economic effects of both the COVID-19 virus and a crude oil price war between Saudi Arabia and Russia continue to be felt around the world and even here in the Gem State. Idaho gas prices dropped by 14 cents in the last week, and the U.S. average for regular gasoline is about to fall under the $2 per gallon mark, according to the Idaho office of the American Automobile Association.
“Crude oil and the finished products that come from it, like gasoline, are a big indicator of economic strength, or in this case, the lack thereof,” said AAA Idaho Public Affairs Director Matthew Conde. “What we’re seeing right now is a one-two punch. On the supply side, disputes over production have motivated Saudi Arabia to flood the market with cheap crude oil, now approaching $20 per barrel. On the demand side, health and safety precautions are keeping many Americans closer to home, including here in Idaho. Both factors are driving down prices at the pump.”
Today, the U.S. average price is $2.01, which is 43 cents cheaper than a month ago and 68 cents cheaper than a year ago. Drivers in ten states are already paying $1.75 per gallon or less, experts said.
“The average fuel price in Idaho is $2.34, which is 19 cents cheaper than a month ago, and 18 cents less than a year ago,” Conde stated.
In the Rockies region, all states but Utah saw double-digit price drops over the last week.
“At $1.97 per gallon, Colorado was the first state in the area to fall under the $2 mark, but Montana could get there this week. Gasoline stocks in the region held steady at 8.9 million barrels, but regional refinery utilization dropped to 81 percent. If refineries keep production low, the move could reduce stocks in the coming weeks, especially when demand for fuel returns,” Conde explained.
Since the beginning of the month, the West Texas Intermediate benchmark for crude oil has taken a nose dive -- from $45 per barrel to nearly $20 per barrel today. That’s the lowest price since 2002. Until geopolitical tensions ease between Saudi Arabia and its oil-producing partners, experts feel the trend is likely to continue. While cheaper gas prices are a welcome by-product, Saudi Arabia’s move could eventually cripple U.S. crude oil production, impacting the domestic economy in other ways.
“Due to low demand, there’s an unusually high amount of winter-blend fuel still available, so the EPA has extended the sale of winter-blend gas,” Conde said. “It’s a cheaper product to make, and delaying the switch to more-expensive summer-blend fuel will help keep prices down this spring.”
AAA predicts that once the coronavirus has abated, pent-up demand to work, travel, and recreate will push pump prices higher in a relatively short amount of time … and in time for major summer holidays. But for the next few weeks, the trend of cheaper pump prices is expected to continue.