Low fuel demand leads to low gasoline prices

(KOTA)
Published: Apr. 26, 2020 at 8:52 PM CDT
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Gas prices are dropping, and people in the Black Hills are noticing that.

One resident says, "I'm getting up to the hills quite a bit so no complaints here." Another local comments, "I love that the price is so low, it's really nice that my family and I can go out fishing and enjoy some local trips. But it does suck that I have friends in Wyoming are getting furloughed."

Another Rapid City resident says, he also personally knows people who are affected. "I know a couple of people who work in the oil fields from here to North Dakota and all the way out to the east coast that are just currently waiting for work to come back around."

Some gas producers cut employees hours or placed them on furlough. The oil market has not been the same.

"Why did that happen? Because so much of the world, and the U.S., is shut down now," says Dr. Michael Busler, an economics expert. "The demand for gasoline and oil is probably down between 35-45%. When that happens of course the price drops down."

Not only that, some other countries are still producing oil even when the demand is low.

"Especially Saudi Arabia can produce in such a low price, they don't have to cut back and still make a profit 20, 25 dollars, but it would benefit everybody if they ease back a little bit until the market recovers," says Dr. Busler.

Overall, Dr. Busler thinks things will go back to normal. "Other countries around the world are also getting their economies up and running, that will increase the demand for oil, and that will bring the price both oil and gasoline back up again."