The price of oil dropped so low yesterday that people were being paid to store it.
From an all-time high of more than $140 a barrel in 2008, US oil prices have tumbled as the novel coronavirus outbreak thwarts travel plans and causes demand to slump - so far, in fact, that as of April 20, 2020, the US price for a barrel of crude is negative. As in, less than zero. As in, in theory, some of those with oil to sell might even be willing to pay someone to take it off their hands.
It's a bizarre phenomenon spurred by the fact that US storage tanks are near capacity, meaning they might be unable to hold all the excess crude that's being produced. The moment happened briefly yesterday, on April 20, before WTI crude oil rose back up to $1.40 a barrel at the time of this writing.
Energy demand is so low at present that oil companies have already taken to stockpiling the stuff on sea barges and anywhere else they can, but traders worry that that might not be enough - that even this extra space could be wiped out.
A US deal with Russia, Saudi Arabia, and other oil-producing countries sought to nip this issue in the bud by cutting oil production while demand is in the dumps - by 9.7 million barrels a day, starting in May. But oil consumption could fall by about three times that in April, analysts project, so that US oil companies might still face a storage crisis.
Crude oil prices are set by traders, typically on the basis of the grade of the oil, its place of origin, and the date of delivery. But while adjustments are typically small enough that the average consumer pays no mind, on Monday, traders' storage fears sent oil futures tumbling into negative territory.
So what does this mean for us as drivers and consumers?
In short, no, gasoline prices are not going to go negative, too. In other words, gas stations won't be paying you to fill up your tank. That's because, while the price of crude does typically constitute the biggest portion of the price-per-gallon of gasoline, several other factors like state taxes, refinement ,and transport costs also contribute.
That said, gas prices ought to be depressed for a good while longer, so you might just be able to afford actually filling up your Dodge Challenger SRT Hellcat without having to skip a few meals.