On New Year’s Day, gas prices in California averaged about $3.59 a gallon. Through January and February, prices drifted down a little. But during the week of March 10th, the world started to change.
Panic over the COVID-19 pandemic set in. On March 19th, Governor Gavin Newsom issued a statewide “Stay at Home” order to all 40 million California residents. From this point on through May 8th, only essential businesses such as grocery stores, pharmacies, and gas stations remained open. Everything else closed. Professional sports were canceled.
The people of California, the world’s fifth largest economy, almost completely stopped driving for nearly two months. Demand for gasoline sunk and this set in motion a subsequent drop in gas prices.
By April 29th, the average statewide gas price had fallen to about $2.70, a 25 percent decline. The lower prices have been one positive in an otherwise very negative pandemic and recession.
Crude oil is refined into gasoline. While demand for gas dropped, oil prices also dropped. However, oil prices actually tanked and went negative on April 20th. That’s right, the price of oil closed at -$37.63 on Monday, 4/20/2020. This meant that sellers of oil actually paid buyers to take it off their hands.
In the last few weeks, oil prices have recovered and closed at $24.41 on Monday, May 11th. Since January 1st, oil has dropped a whopping 60 percent. So while we’re enjoying a 25 percent discount on gas, the gas companies are enjoying an even greater discount on oil.
Ready for the best part? It appears gas prices have already bottomed.
The blue curve is the California average and it appears to have bottomed on April 29th. The same bottom appears on the red curve which is the national average.
Here’s further evidence from a local Southern California gas station in Whittier. The photo on the left was taken on April 25th and the one on the right was taken on May 11th. The price never went below $2.29 and it just went up to $2.33. Enjoy it while it lasts.
