Today, market is flooded with supply. Indian reservations in New York State are charging $0.70 a gallon for 87 octane gas. SEVENTY CENTS A GALLON!!!!!
Among the many effects of the coronavirus pandemic ripping apart the U.S. economy is a steep drop in gas prices, brought on by plummeting demand as people stay at home and an international oil price war between Russia and Saudi Arabia. The national average for regular 87 octane currently sits at a decade-low $1.88. We've chronicled stations undercutting that significantly, mostly for publicity, but it appears another price war underway in a small town in western New York has brought about a new record low: $0.62 per gallon.
Analyst Patrick De Haan of the industry tracking site GasBuddy.com highlighted the micro trend after a Twitter user snapped a picture of the pricing display at Allegany Gas & Smokes in Salamanca, New York, a town of about 5,000 people in the Allegany Indian Reservation. The original report described it as a price war, and sure enough, at least three of the six-plus gas stations in the area are currently sitting under a buck a gallon for regular fuel. $0.62 is below the previous mark of $0.69 set by an Ohio station last month.
I have a little different view on that. Being that the US is now the largest oil producing country in the world. The US could be self sustaining. If OPEC chose to not do any cuts, they were staring at hefty tariffs. These tariffs could have on its own leveled the playing field. Which could still happen to save the US oil industry. OPEC has been price fixing for 50 years and we cannot be a part of that due to our laws. So I don't believe OPEC had many options. They made the ONLY choice they could. This is what happens when two of OPEC's heavy hitters try to see who can pee further. The wild card is that the US now has a fire hose to pee with and OPEC knows it. If Trump needs to levy tariffs to save US oil, he will.
A couple more points. 1) US shale industry HAS lost thousands of jobs already. Most US shale Co's are break even at $35+ p/b. 2) We are many many years away from leaving fossil fuels. I am 50 years old and doubt very seriously that I will see US shale and fossil fuels go away in the remainder of my life. I would like to find a comparison of our BPD usage now Vs. 1990.
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