GREEN BAY, WI (WTAQ) – Concerns over the Covid-19 coronavirus are impacting industries around the world, along with gas prices right here in Green Bay.
“There has been very little demand for oil. The only reason is because of the coronavirus…and it’s still much of an unknown when that is going to end,” says GasBuddy.com Petroleum Analyst Allison Mack, “[Prices could] hit below $2.00 a gallon by the end of this month if things don’t change.”
An excessive supply and plummeting demand has oil-producing countries scrambling for solutions to re-balance prices around the globe. But with no changes in sight, prices around the Green Bay area will just keep sliding.
“It has already dropped three cents compared to where you were last week, it’s at $2.27. So I won’t be surprised if I see $2.15 next week, and then another ten cent drop the week after that,” Mack tells WTAQ News, “It dropped ten cents from last week [in Wisconsin]. So that’s a pretty significant drop, especially during this time of year when prices should be heading up.”
But, as usual, the local economy has very little impact on gas prices. It’s the global economy that is dictating this drop. So when a major economic player like China has large areas cut out of the equation, the demand for oil takes a huge blow.
“The biggest determining factor when it comes to gas prices is oil prices, and oil prices have been dropping. The big reason for that is economics 101 – supply and demand,” Mack says, “[China] is a huge country that really depends a lot on oil, it’s actually the second country behind the United States for the highest demand for oil, and with so many of their cities locked down, oil prices have dropped. [Right now], a barrel of oil is $32. That is very low. To put things in perspective, in 2015, we saw a barrel of oil go for about $60 and the national average dropped to $1.95.”
While that comparison seems like it might forecast an even bigger price drop, don’t get too excited. Countries like Russia and Saudi Arabia are working on ways to stabilize the economic imbalance of supply and demand.
“The OPEC countries are trying to hold back production because there’s a huge imbalance between the supply side and the demand side,” Mack says, “Holding back oil production, anything of that sort is what’s really going to level off the prices. But until that happens, we’re only going to see it continue to tick back down.”
