London, Kentucky, became the first U.S. city to see pump prices fall below $1 a gallon as coronavirus-related lockdowns halt transit across the country — and it won’t be the last.
Several others are poised to join the club in the coming days as the pandemic crushes fuel demand and sends the economy to the brink of a recession. While cheap fuel usually spurs gas-guzzling Americans to hit the highways, the latest downturn in prices portends dark times ahead.
“You almost can’t even give it away,” said Paul Bingham, head transportation economist at IHS Markit Ltd. “The price elasticity has totally changed. It’s full-on demand destruction.”
Nationwide, pump prices are headed for depths not seen since the Great Recession. Retail gasoline is expected to average $1.99 a gallon in the next two days and fall as low as $1.49 by mid-April, the lowest level in 16 years, according to Patrick DeHaan, head of petroleum analysis at Gasbuddy.
The downturn comes as large swathes of the country are under containment orders in an effort to curb the virus that’s killed more than 15,000 people globally. U.S. unemployment could rise 30% this quarter while the GDP may drop by 50%. In that environment, low gasoline prices won’t induce consumption in the way it typically does, and may instead be yet another indicator of a struggling economy. (Read more from “‘Can’t Even Give It Away’: Gasoline at $1 Is Warning for Economy” HERE)