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USA: Collapse of the price of a barrel, reached US $ -40 0:41
(CNN) - Even though a historic oil price drop sent the numbers down on Monday, don't expect to be paid to fill up your gas tank any time soon.
Or never, the truth be told.
- The worst day: US oil ends at $ -37 (yes, that's a negative number)
There were some unique conditions that drove oil prices below $ 0 for the first time. Most importantly, crude oil prices only have an indirect impact on the retail price of a gallon of gasoline.
The big drop in gasoline consumption in the United States in recent weeks due to home stay or quarantine requests during the covid-19 outbreak has reduced oil and gasoline prices as there is oversupply from both. And the space needed to store that oversupply is running out, which is part of what led to the negative price of oil on Monday.
According to AAA, the average price of a gallon of gasoline for Monday stood at $ 1.81, which is 5 cents a gallon less than a week and 36 cents a gallon compared to prices a month ago, as Orders to stay home were only beginning.
Negative terrain for the first time: prices fell below US $ 0 while the US running out of space to store barrels of crude oil. The graph shows the May contract price for light crude.
So gasoline is cheap, more than a dollar cheaper than a year ago right now, but no less than $ 0.
Monday's negative oil price was the result of unusual dynamics in the oil market. The all-time low in the May contract for West Texas Intermediate came with very low trading volume before Tuesday's expiration. This is due to the concern that there will be no space to store the barrels delivered in May. However, the June contract only fell about 10% to $ 22 a barrel. And Brent crude, the global benchmark, fell just 5% to $ 26.50 a barrel.
- "Panic" in the Oil World: Crude hits less than $ 0 a barrel, the lowest price since oil futures trading opened in 1983
Still, oil contracts are renewed every month and are typically not locked at record lows.
"With the expiration of futures, trading in programs and the like, prices can go crazy," said Tom Kloza, chief oil analyst with the Oil Price Information Service. "Today that ecosystem went crazy."
The causes of the fall in the price of oil 0:51Crude is not the best indicator of the retail price of gasoline. Instead, wholesale gasoline prices determine which gas stations will pay for gasoline. And gasoline futures didn't have the same wild change on Monday, closing just a few cents at about 67 cents a gallon. Actually, that's almost double the price they were negotiating last week.
"Wholesale gasoline futures and oil futures are definitely linked, but they don't necessarily reflect each other on any given day," said Jeff Lenard, spokesman for the National Association of Convenience Stores.
And even wholesale gasoline futures do not completely determine the price a service station will pay for your product. Most have contracts that determine the price, albeit with future prices included in that.
Once the cost of wholesale gasoline has been considered, there are all the other costs that go into the price you pay at the gas station.
- Apocalyptic scenario: the effect of the slump in oil prices on US companies
The US Energy Information Administration estimates that in 2019, when the annual average was $ 2.60 per gallon, the average cost of transportation and marketing was approximately 39 cents per gallon of gasoline. Refining costs and profits added another 34 cents on average.
With the volume of gasoline pumped decreasing by half or more, many station owners are increasing the profit margin they charge for each gallon by a few pennies to offset the sharp drop in demand.
And then there are the gasoline taxes.
Federal gasoline taxes cost motorists 18 cents a gallon.
State taxes vary widely from state to state, from about 14 cents per gallon in Alaska to about 60 cents per gallon in California.
But on average, state taxes add another 36 cents per gallon, bringing the average tax on a gallon of gasoline to about 54 cents nationwide.
Unfortunately, even though you could buy a whole barrel of crude oil for nothing on Monday, a single gallon of gasoline will cost you slightly more.
Gasoline
