Stay in place – your place!
-April 10,2020-
Turns out it is easy to cut California gas prices, after all. Just don’t go anywhere! Right now that is just what is happening. Probably at your place, no?
All across the Golden State residents are largely abiding by a stay-in-place mandate with the clear benefit being California’s slow growth in the spread of the virulent COVID 19 virus.
So it’s no wonder California gas station operators are feeling the pinch.Take a look at these webcam shots of mostly empty major highways shot today on both the Central Coast and around the San Joaquin Valley.
California’s 10,000 gas stations are looking at a decline of 40 to 70% of the average amount of gas sold in April according to a Sacramento trade group.
James Allison, spokesman for California Fuels and Convenience Alliance, says stay-at-home customers are not buying gas but not coming inside either to buy convenience items, where many small operators make their money.”It’s definitiley hurting but so are all of us” he admits.
Despite tougher regulations, Allison says “there has been resurgence in the number of gas stations in the state” as well as an increase in their size and array of offerings. “We are seeing more selection of fresh and healthy food items’ bigger variety of beverages and more automotive items.”
Unfortunately this larger selection is just sitting there as demand, for now, having dried up.
Demand is also down across the US says oil analyst Tom Kloza.
“Gasoline demand continues to drop, although the pace of the decline has slowed a bit in April.” Kloza expects “ that last week’s 52-year low in consumption will show up via sub-5-million b/d demand figures soon. We haven’t plumbed the bottom yet.”
The 5 million barrel a day numbers are from the Energy Information Agency (EIA) that show demand for gasoline nationwide is less than half it was in April of 2019.
Prices are reflecting the drop in demand. Several California gas stations are selling regular for under $2.The average is down to $2.87 a gallon compared to $3.44 at the beginning of the year and $3.92 year ago.
California wholesale fuel prices are now cheaper than NYMEX prices- typically they are the other way around.
For now prices at the pump in California are still going down a little every day according to AAA. But that could change if the major players,OPEC and Russia agree to limit production.
California is an island however and our low demand pegged to shelter in place rules and an oil price pegged to Alaskan crude may keep gas prices down here. Alaskan crude that was selling for $50 a barrel in March is for sale this week for $18.