Lazaro Aleman
ECB Publishing, Inc.
Don't expect the plunge in gasoline prices at the pump to continue.
That is basically the word from the American Automobile Association (AAA), a 60-plus million member national and international organization that keeps tabs on vehicle-related issues, including the price of fuel.
“How much lower gas prices go will depend on how the market responds to a historic deal made by OPEC and its oil producing allies over the weekend,” AAA spokesman Mark Jenkins said on Monday, April 13, referring to the finalization of a record production cut announced by OPEC and its allies on the previous day.
With Florida gas prices already down 56 cents from earlier, and falling another six cents just the prior week, Jenkins said that the impact of the OPEC deal shouldn't be immediately evident on gas prices. And how much lower they might go, he said, would depend on how the market responded to the historic deal between OPEC and its allies.
Per the deal, which was finalized on Sunday, April 12, OPEC and its allies agreed to cut oil production by 9.7 million barrels, constituting “the single largest output cut in history,” according to the AAA.
“This effectively ends a price war that broke out between Saudi Arabia and Russia, which caused an overnight 25-percent reduction in oil prices last month,” Jenkins said. “From there, the downward trend continued as the effects of the coronavirus impacted the global economy and forced Americans to stay off the road.”
He noted that since mid February, the price of crude oil had plummeted from $53 per barrel to $23 per barrel, and gas prices in Florida had dropped 56 cents during the period.
“This OPEC deal is an attempt to eliminate the supply surpluses and strengthen the price of crude,” Jenkins said, adding that while the deal should not cause prices to spike suddenly, it would affect how much lower they might go.
“Wholesale gas prices suggest that the state average could eventually reach $1.50 or below,” he said. “But that won't happen if oil prices gain upward momentum.”
In Florida alone, according to the AAA, gasoline demand is down as much as 50 percent in large cities as residents stay at home as a protective measure against the coronavirus.
“The longer that demand is down, the more that crude and gasoline supplies will build; and it will take some time for drivers to work through all that once the stay-at-home orders are lifted,” Jenkins said.
On Wednesday, April 15, the average price of gas in Florida was $1.83 per gallon, according to the AAA. In Jefferson County, meanwhile, the average was $1.88 per gallon, although individual stations ranged from $1.65 to $1.99, depending on their location.