Gasoline futures on Tuesday plunged below levels seen in the aftermath of 9/11 and the 2008 global financial crisis as refiners cut back production amid widespread shutdowns related to the CCP virus.
Gasoline futures traded at below 45 cents per gallon on Tuesday evening, the lowest price since 1999.
Gasoline futures are a crystal ball for the direction of the gas prices at the pump, which have declined steadily due to a drop in oil prices and collapsing demand at the pump. The national gas price average dropped to below $2.11 on Tuesday, according to AAA.
Pumps in Oklahoma and Tennessee sold gas for 99 cents a gallon on Tuesday. A gas station in Kentucky became the first member for the 99-cent club days earlier.
The average number of gallons sold at the pump dropped by 40 percent below the 30-day average on Monday, according to Patrick De Haan, an analyst with GasBuddy. Demand for gasoline was more than 15 percent lower than the same time last year every day since March 16, according to De Haan.
The plummeting demand is forcing refiners to cut capital expenditures and reduce production. Phillips 66 said on Tuesday it would cut spending on projects including pipelines by $700 million in 2020. Canada’s Suncor Energy is cutting its capital spending program by $1.5 billion. Suncor expects its refining volumes to drop, but did not provide an exact figure.
Lockdowns and partial shutdowns in states with large populations like California and New York are driving the national drop in demand as drivers stay off the road in compliance with state and federal guidance aimed at stopping the spread of the Chinese Communist Party (CCP) virus.
The Epoch Times refers to the pandemic as the CCP virus because the Chinese Communist Party’s misfeasance, attempted cover up, and mismanagement led to the global outbreak.
Colonial Pipeline Co said on Thursday it would cut volumes on its primary lines delivering gasoline and diesel fuel to the United States.
Refiners around the world have already started cutting output or are considering such measures as the coronavirus curbs travel and driving.
Exxon Mobil Corp cut production at its 502,500 barrel per day (bpd) capacity refinery in Baton Rouge, Louisiana, on March 21, according to sources familiar with plant operations.
Chevron Corp also cut production at its 269,000 bpd California refinery to match decreased demand, sources said.
Delta Airlines is reducing production at its 190,000 bpd refinery in Trainer, Pennsylvania, by 40,000 bpd, according to a source familiar with the matter.
For most of last week, U.S. diesel margins held up relatively well as both trucking and farming, two sectors that rely on diesel, continued operating.
But refiners’ moves to divert production capacity previously devoted to other fuels to diesel is starting to cause oversupply in some regions, leading to a drop in cash prices, market participants said.
Cash prices for diesel in Chicago slid last week to 34 cents per gallon below the heating oil futures contract, the lowest seasonally since at least 2011, early Refinitiv Eikon data showed.
Reuters contributed to this report.