Oil Prices Are Negative. No, You Won’t Be Paid To Fill Up
The world has too much oil and nowhere to store it. Tankers are anchored at sea with millions of barrels of oil on board with no place to deliver it. Record low demand for oil due to the virus has caused a record surplus, causing prices to collapse.
On Monday, April 20, 2020, the price of oil hit a historic low, trading on the open market for less than zero dollars. Yes, oil was worth less than nothing.
By Monday afternoon, on the futures market, a barrel of West Texas Intermediate for the May contract was selling for -$40. In other words, oil speculators were actually paying people to take their oil. That's a far cry from 2007 when oil was selling for over $140 per barrel and pump prices were over $4 per gallon.
So what does all this mean for you at the gas pump? Will Get-N-Go or the Gas Stop be paying you to fill your vehicle? Don't count on it.
What's more likely in the Sioux Falls area is gas prices could dip below $0.99 per gallon. As I write this on Tuesday, April 21, 2020, GasBuddy reports the average price per gallon in Sioux Falls stands at $1.59 and the lowest in town is $1.39. So there is a way to go yet before we're under $1.
According to GasBuddy, there are now 13 states selling gas for under $1.
The saying goes, 'You can't get something for nothing.' Even with a barrel of oil trading for less than 'nothing', we will always pay 'something' at the pump.
You still have to figure in all the extra costs of getting that oil turned into gasoline and then pumped into your tank. There is transportation, marketing, and refining costs, plus profits. Then add in federal and state taxes.
So will the gas station pay you to fill up your tank? No. But could gas slip below $0.99 in the Sioux Falls area? That's more likely.
Dakota News Now contributed to this story.