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Low demand for oil leaves gas prices across the national plummeting

Posted at 6:43 PM, Apr 20, 2020
and last updated 2020-04-20 21:43:56-04

BAKERSFIELD, Calif. — U.S. oil prices plunged below zero on Monday hitting a new record low.

“First off we’ve never seen what is going on today. We’ve never seen the price of future oil contracts actually going negative,” said David Anderson, co-owner and managing partner of Moneywise.

The loss in demand for oil caused the market to take a hit amid the coronavirus pandemic. Leaving places like Kern County possibly feeling the impact.

“We will probably see some bankruptcies in the oil industry because of this,” said Anderson.

West Texas Intermediate, a grade of crude oil used as the benchmark in oil pricing, dropped below $1 a barrel, which is the lowest price on record.

“We feel it even more here. While many communities across the U.S. applaud when the price of oil goes down, we don’t here because we know it not only affects us at the pump but it affects jobs,” said Anderson.

While consumers may see a win with lower prices at the pump for several businesses it could be a sign of hard times ahead.

“The problem is most people can’t take advantage of it right now because they’re not traveling, they’re isolated. Which is why we have this problem. There is just too much oil and not enough places to store it and it’s driving the prices down,” said Anderson.

According to AAA the national average for gas prices is down more than a dollar a gallon from where they were a year ago. AAA figures show gas prices last year were about $4 dollars, today the current average is about $2.70 a gallon.

Sam Juda who owns seven Samco Food stores and gas stations in Kern County, said right now his gas prices align with the national average.

“The lowest prices we have right now is at $2.69 per gallon," said Juda.

Juda said people are filling up because it’s cheaper but it’s taking them longer to use the gas.

“Instead of once a week, right now we’re seeing the customer every two weeks,” said Juda.

Some money experts say the longer businesses remain shut down the longer recovery process is for the economy.

“Even if the coronavirus were to disappear tomorrow it’s not like you can turn the economy back on like a light switch and then tomorrow everybody's out. So, it’s going to take some time here. How long it’s going to take really depends on how long the coronavirus is around but we’re in this for the long term. So, don’t expect any major positive changes in the near future,” said Anderson.