Consumers see cheaper gas at the pump as COVID-19 reduces demand for oil
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The new coronavirus continues to ripple through the global economy, impacting everything from stock and bond prices to supplies of medical gear, from household goods to the cost of oil and gas.
Crude oil prices have fallen about 25% since early January, after China shut down industry and commerce to try and contain the epidemic. Global oil demand has fallen further as the virus has spread to Europe, the Middle East and the Americas.
With global demand down, companies are using less oil to make and ship things. As consumers avoid contact and curtail travel, they use less oil, too.
That’s already translated into cheaper gas prices in the U.S. — down about 15 cents per gallon since January, to $2.42 a gallon this week, according to the U.S. Energy Information Administration.
Oil analyst Stephen Schork said recent crude oil price declines will continue to flow through to the pump.
“So two weeks hence, we can expect to see a 7-cent pullback,” he said
Of course, the U.S. also produces a lot of oil nowadays. Lower crude prices make that business less profitable. But Tom Kloza, global head of energy analysis at the Oil Price Information Service, said the U.S. shale-oil industry is resilient.
“You’ve got Chevron and Exxon-Mobil as large players and they’re not really strapped for cash,” Kloza said.
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