GAITHERSBURG, Md. -- The cheapest gasoline prices in more than 12 years are showing up in some states, with “previously unthinkable” 99-cent gasoline becoming a strong possibility as wholesale gas prices plunge amidst growing supply, according to a report by gas-price service GasBuddy.
GasBuddy said Feb. 9 that nine states are currently witnessing the lowest average gasoline prices since early 2004: Oklahoma ($1.37), Indiana ($1.45), Kansas ($1.46), Ohio ($1.47), Michigan ($1.49), Minnesota ($1.52), Wisconsin ($1.54), Illinois ($1.57) and North Dakota ($1.63) as oil refiners offer “bargain-basement prices” to rid themselves of winter-spec gasoline ahead of a pending shift to cleaner-burning fuel.
The price of crude oil—the main expense in generating fuels like gasoline—has plunged from more than $107 a barrel in June 2014 to around $30, helping pull down prices at the pump.
Crude prices continued to languish Monday, dropping below $30 in New York. If oil prices continue to march lower, gas stations across a wide swath of the country could soon peddle fill-ups at prices not seen since the 1990s, the report said.
“There is a huge excess of gasoline supply in the Midwest,” Patrick DeHaan, senior petroleum analyst at Gaithersburg, Md.-based GasBuddy. Refiners there can access Canadian crude that’s even cheaper than the U.S. benchmark and have turned an oil glut into a fuel glut.
“That could trigger fire sales—very quick and low price sales,” he said, adding that in the Great Lakes region, where gas stations are fiercely competitive, ultralow gas prices could appear as refiners are forced to clear out supplies of winter grade fuel. GasBuddy said Tuesday that there’s a “strong possibility” gasoline prices in the region could dip to 99 cents a gallon.
The last time gas prices averaged $1 for the whole country was March 1999 when U.S. crude oil fetched less than $15 a barrel, the report said.
A lot of factors would have to conspire to drop oil and gasoline prices that low, making $1 gasoline unlikely for the entire country.
“If oil drops closer to $20 per barrel and refinery production remains strong, we could have hundreds of stations around the country selling gas for less than a $1,” Michael Green, a spokesperson for AAA, told the newspaper.
“The fact is, Americans still love to drive,” Michael Jennings, CEO of HollyFrontier Corp., which operates refineries from Tulsa, Okla., to Cheyenne, Wyo., told the Journal. “Drivers are in love with gasoline below $2.”