Amidst international quarantine measures, the coronavirus pandemic has wreaked havoc on many world economies. One of the worst-hit markets is the oil industry. As daily commuting and long-distance air, rail, and road travel have come to a halt, California has seen its gas prices drop about ten cents per gallon every week since mid-March.  

Worldwide demand for crude oil continues to decline dramatically as COVID-19 keeps people in their homes. In response to this decline, major oil exporters have been competing to keep their oil sales up. Saudi Arabia and Russia made international headlines by engaging in a “price war,” resulting in Saudi Arabia drastically slashing prices for its crude oil. Currently, California imports the largest percentage of its crude oil from Saudi Arabia, at 37 percent. Oil futures fell to minus $37.63 per barrel on the NYMEX exchange, not only the lowest price on record but a price where oil traders are paying consumers to take the product off their hands.  

The result manifests itself in an average gas price of $2.81 per gallon for consumers, down from $3.25 in March according to AAA.  In parts of central California, including Orinda and the East Bay Area, cash prices for regular unleaded gasoline have dipped below $2.00 per gallon. The average cost of gas in California hasn’t reached below two dollars since the Great Recession of 2007-8.

Drops in gas prices continue to garner mixed responses. For consumers, low prices have alleviated the financial burden purchasing gasoline usually presents, especially in California where gas prices are notoriously high compared to national standards. For those who now rely on driving as a break from their homes, while still following social distancing regulations, low gas prices are an unexpected boon. “It’s been really nice to still be able to drive around during quarantine, whether to go to a trail or just get out of the house and since I pay for my own gas, the drop in prices has been great. It must not be great for the economy, but for students and people unable to work, the price change has been beneficial,” senior Jin Mei Howell Young said.  

However, as beneficial as low prices are for consumers during the current economic downturn, plummeting gas prices are signals of a dangerous economic future. While California imports a significant portion of its crude oil, it produces around a third of it. Therefore, drops in oil demand could harm one of California’s largest industries, and further exacerbate unemployment as the market narrows.  

Economic experts warn Californians not to worry too much about the possible financial ramifications of the troubles facing the petroleum industry. “We’re going to see oil prices gradually creep back up again. Looking at the past, when we had the falling outs, none of the producers want prices this low, they are certainly trying to figure out how to get them back up again,” Severin Borenstein, faculty director of the Energy Institute at UC Berkeley’s Haas School of Business, said.