As the COVID-19 pandemic flared in some U.S. cities and stay-at-home orders applied to the vast majority of the nation last week, it’s not surprising that a lack of demand and a glut of supply continued to drive gas prices downward.
On a national basis, regular-grade gas prices Monday stand at $1.92, according to AAA. Wisconsin has the cheapest state-wide gas prices, at $1.43, with Oklahoma ($1.47) and Ohio ($1.55) close behind.
Regionally, the West Coast continued its trend of having the highest prices at the pump. California actually dropped below the $3.00 mark—at an average $2.96. Washington ($2.68) and Oregon ($2.63) followed.
The President, in a potentially confusing set of statements made last week, said on Tuesday—the same day the administration revealed revamped vehicle gas mileage requirements—that the sub-$1.00 gas that had been popping up in parts of the country was “like giving a massive tax cut to the people of our country.”
Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!— Donald J. Trump (@realDonaldTrump) April 2, 2020
Then on Friday, Trump said that he has spoken to foreign leaders over an expected 10 to 15 million barrel (or more) cut in oil production that “will be GREAT” for the oil and gas industry.
That caused oil prices—not pump prices, yet—to surge by about 20%.
It's an important distinction that gas prices aren't tightly tethered to oil prices. According to the U.S. Energy Information Administration, just 54% of pump prices are due to the cost of crude in 2019. Taxes make up 18% of that, and the balance relates to profits, refining costs, distribution, and marketing.
Meanwhile, the simple rules of supply and demand continue to apply to refineries and stations. The U.S. Department of Energy last month reportedly rented 77 million barrels of storage for U.S. gasoline producers for the supply excess—a move that might buy time for ethanol producers, who have been particularly hard-hit by a production pause in some cases.