[Asia Economy Reporter Kwon Jaehee] There are predictions that gasoline consumer prices in the United States will fall below $1 per gallon (3.78 liters). Gasoline has already been traded below $2 per gallon a week ago, indicating a rapid price drop in a short period. Negative forecasts suggesting this could signal a wave of refinery bankruptcies are gaining traction.
On the 8th (local time), CNBC reported that in some parts of the U.S. Midwest, gasoline distributors received only 10 cents (about 122 won) per gallon. Consequently, there are expectations that gasoline consumer prices could drop below $1 per gallon. According to the American Automobile Association (AAA), just a week ago, U.S. gasoline prices were traded below $2 per gallon (about 2,460 won).
Besides some areas in the U.S. Midwest, in states such as Colorado, Wisconsin, Iowa, Montana, and the Dakotas, gasoline was traded among distributors for less than 20 cents per gallon.
The U.S. economy entering a shutdown has intensified gasoline oversupply, and despite refineries reducing production by about 20%, storage tanks are running dry.
Tom Kloza, a global energy analyst at Oil Price Information Service, stated, "I am confident that current crude oil wholesale and spot prices are as low as during the Arab oil embargo in the early 1970s," adding, "We will see gasoline prices below $1 across the U.S. in the future."
According to AAA, the average retail price for unleaded gasoline nationwide was $1.90 per gallon on that day. However, most regions were trading at prices lower than this average. Notably, Wisconsin, Texas, Arkansas, and Oklahoma showed lower gasoline prices. Conversely, the Northeast, Mid-Atlantic, and Western regions had higher prices due to higher gasoline taxes.
Last week, U.S. drivers used an average of 5.1 million barrels per day, which is about half compared to 9.8 million barrels during the same period last year.
Accordingly, there are negative forecasts that refineries may need to cut production further or even shut down. Andrew Lipow, president of the Lipow Oil Associates, said, "This is the first time demand has dropped so sharply in such a short period," adding, "Refineries will need to reduce production rates further, and some have already begun shutting down."
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