Recent gas crisis – explained
May 9, 2020
During the coronavirus pandemic, gas prices have been sliding downwards and at some points nose-diving to a cost of less than a dollar per gallon in certain states. The price trend, however, does not originate from the stay-at-home orders in effect around the world. This meltdown started from oil superpowers Russia and Saudi Arabia’s meltdown of agreements to lower their supply of oil.
The Organization of the Petroleum Exporting Countries (OPEC) helps foster agreements between oil-exporting countries to help keep the output of oil in line with the demand. Russia, which is not in OPEC, declined to lower the production of its oil as demanded by Saudi Arabia and OPEC at the beginning of March, marking the beginning of the fall of oil prices. Then the COVID-19 pandemic happened.
A Chevron employee confirmed that traffic at the station had lessened considerably in the past few months, but noted that there has been a resurgence lately due to California beginning to re-open.
People who have been ordered to remain couched in their homes have been needing to fuel up less – with the notable exception of essential workers. This lack of demand contributed to the lower prices of the past weeks.
“I spent exactly half as much as usual for a full tank of gas, I mean I’ll take it [and] overall it’s beneficial to consumers and not the big oil businesses,” junior Ryan Baylon said.
The lower prices and lower demand have been present for months now but prices are slowly showing signs of rising again here in Carlsbad.
“The Energy Information Administration noted that gasoline [supply] dropped by a significant 3.7 million gallons in the past week, which means there is more driving occurring than in prior weeks,” Jeffrey Spring, the Automobile Club of Southern California’s corporate communications manager, said in an interview to Fox 5 San Diego. “Prices are still declining, but if demand continues at this higher pace, we may be nearing the bottom of the price curve.”
Even when the price does rise again, the recent crisis has caused discussions over the U.S. becoming more reliant on green energy, and even led to renewables producing more energy than coal for 40 days for the first time ever.
“Ultimately, I believe this crash will also help the U.S. lean on renewable energy more, which in the end is a win win since we’re not so reliant on fossil fuels,” Baylon said. “The time for the U.S. to move towards a green planet is right now if any, because when oil prices climb up again it’ll be harder than ever to shift our reliance and stop subsidizing oil which I’m glad is finally being talked about.”