Virus, price war send local gas prices plummeting

While it is difficult to find toilet paper, hand sanitizer and disinfectant wipes during the ongoing COVID-19 crisis, one commodity in great supply through this virus-paralyzed spring is gasoline.

Not only is there a lot of it available, but it's getting cheaper and cheaper to buy nearly every day.

A drive-by survey of 35 service stations in Cape Girardeau, Scott and Stoddard counties Sunday afternoon found gas prices as low as $1.69 a gallon in Benton, Bloomfield and Dexter.

Prices in Jackson and Fruitland were anywhere from 18 to 20 cents higher.

Patrick DeHaan, a Chicago-based petroleum analyst, said Friday the national per gallon average is under $2 for the first time in four years.

A message is seen Sunday on a gas pump at Gary's Quick Stop in Dexter, Missouri.Jeff Long

"By mid-April," DeHaan said, "prices could drop to $1.49 a gallon, the lowest since 2004.

"Cuts of 35 to 75 cents a gallon (more) are coming," he added.

The coronavirus is partly to blame or to credit, depending on your point of view, for this slide in pump prices.

"If you're an over-the-road trucker," said John Mehner, president and CEO of the Cape Girardeau Area Chamber of Commerce, "cheap gas is a benefit.

"You can move your cargo to market less expensively."

The average U.S. motorist is not taking advantage of this price collapse, though, because so much of America is on lockdown.

With an estimated 2 billion people across the globe self-isolating and not going to work, energy demand has plunged off a cliff, triggering a gas glut not seen since 1986.

How long will this last?

"No one can predict (it)," said Adam Kidd, president of Cape Girardeau's Kidd Oil, owner-operator of three service stations, two in Cape and one in Jackson.

"Wholesale (oil) prices change once a day and sometimes more often," Kidd added.

Any observer can figure out what's happening, Kidd said.

It's a supply-and-demand double whammy.

"Supply is continuing to outpace demand," Kidd said.

"When supply and demand go in opposite directions, price is always impacted," Kidd added.

On Friday, World Oil Magazine reported despite news of President Donald Trump's signing of the $2.2 trillion stimulus and rebounding stocks, the global price per barrel continues to drop, to $21.42 by the weekend.

Anxiety over the coronavirus, which has closed schools, shuttered restaurants and emptied virtually every public setting where people normally gather, is not the only reason for the drop.

Saudi Arabia and Russia, two of the most important oil-supplying nations, are in a price war. Neither has cut production.

Ergo, there's simply too much gas available in a time when so few are buying it.

Bloomberg News reported Saturday oil industry producers will soon shut down their wells, referred to in the industry as "shut-ins," because pumping crude makes little economic sense.

"Put simply, the world cannot continue to pump at the level of 100 million barrels a day," said analyst DeHaan, "while demand is as much as 20% lower.

"Supply would overwhelm storage capacity within weeks," DeHaan added.

Mehner, Cape's chamber president for more than 26 years, has never seen anything quite like this.

"This is the biggest moving target I've ever been a part of," Mehner said.

"Everything is volatile now," he added, "and things seem to change by the hour."

Mehner said the chamber has just sent out another email reminding members of available resources.

"Lots of small businesses have been hit (especially) hard," Mehner said, "through no fault of their own."

The chamber established a website, www.keepcapestrong.com, in direct response to the coronavirus emergency.

"In this time of unprecedented health, social and economic uncertainty," the website's home page reads, "it is important Cape Girardeau County feels well-equipped and prepared."