Let’s review the rollercoaster of fuel prices in 2020

2020 has been a year to remember. The impacts of the COVID-19 pandemic have been devastating and will be felt for years to come. As a southern California fuel supplier, we know how hard our local community has been hit. We grieve with you and hope that things will turn around in 2021.

The events of 2020 have dramatically impacted oil and fuel prices. We’ve never seen a year like this. The pandemic and other events throughout the year have caused fuel prices to sink to record lows. Will low prices continue? It’s hard to say. Analysts are still processing the roller coaster ride that prices took this past year. Here’s a breakdown of the price journey:

January 2020: The year started positively. According to GasBuddy’s 2020 Fuel Price Outlook, gas prices were projected to rise by as much as 75 cents a gallon, with 75% of the country’s largest metro areas seeing average prices of $3/gal. The nation’s gasoline bill was projected to rise to $373 billion, and the average household was projected to spend nearly $1935 a year on gasoline. Things were looking up after a couple of years of lower demand and production. Analysts were confident that 2020 was going to be a little better for the fuel and gas industry. Boy, were they wrong.

February: The first effects of the COVID-19 pandemic started to appear. News reports of the disruption to life in China, travel lockdowns, and cases began appearing worldwide. It began as a trickle, and the market held steady for a bit. But it wasn’t meant to be. By February 10th, gasoline’s average price had fallen from $3.5/gal gallon to $2.42/gal, part of a four-week national average decline trend. The market was shaky, and no one was sure how things would change.

March: It seemed like the sky was falling. The World Health Organization (WHO) officially declared COVID-19 a pandemic. Many states went into full lockdown. Schools shut down, workplaces were empty, and businesses closed. The streets were empty as everyone stayed home. Fuel prices dropped significantly. GasBuddy analyst Patrick De Haan said, “Gas prices have spent virtually all of March marching lower, with the drop continuing as the coronavirus destroys oil demand globally, leading to the lowest oil prices we’ve seen in 18 years, paving the way for still an additional 35-75 cent per gallon drop at most stations in the weeks ahead. I don’t think I’ve ever seen such a collapse in prices, even including the Great Recession. What we’re witnessing is easily going to go down as the great collapse in oil demand, and for motorists hurrying to fill up today, they’re wasting their money as prices will continue to drop in the days ahead. Gas stations are passing along the drop several weeks behind, and there’s plenty more room for prices to drop, putting 99 cents per gallon prices as a strong possibility for perhaps many more stations than we previously anticipated. This is truly an unprecedented turn of events.”

April 2020: Unfortunately, things continued to get worse. Amid the pandemic, a brutal oil price war began between Saudi Arabia and Russia. Saudi Arabia initiated the price war in retaliation to Russia’s refusal to slow down oil production to keep oil moderately priced. This oil price war did a number on fuel prices, and they continued to drop to record lows throughout the spring, a time when they would typically be rising. On April 20th, oil prices went into the negatives for
the first time, and gas prices fell to a historic low of $1.74/gallon on April 28th.

Summer 2020: The summer of COVID-19 was much of the same. Life began to open up slowly, but everyone was still cautious, and case numbers began to climb. Travel was still mainly shut down, and several industries were devastated. Millions were losing work, and businesses were closing due to the economic fallout of the lockdown. The summer travel season opened with the lowest Memorial Day gas prices since 2003. Instead of flocking to airports and flying to international destinations, people took road trips for their summer travel. Businesses and communities slowly opened up, fuel demand grew, and prices rebounded by 22% in May.

As the summer and the pandemic wore on, another blow hit the oil industry, hurricane season. 2020 was the most active hurricane season on record. In a rare bit of luck for the US refinery industry, no major hurricanes affected refineries in the gulf, but prices still stayed low, hovering around $2/gal.

September – October 2020: The COVID-19 pandemic continued across the country, as lockdowns were initiated, lifted, and debated. The countdown to the presidential election grew closer every day. Each candidate presented different views of the future of gas prices. The debate over how the election and how each candidate would affect gas prices raged on. Here’s a great video from Gas Buddy analyst Patrick De Haan that dived into each candidate’s energy policies.

For our home state of California, some significant changes occurred. On Sept 23, 2020, Governor Newsom announced that in California, all new cars and passenger trucks sold must be zero-emissions vehicles by 2035. You can view more information about how this ban may affect you on our blog. The landmark announcement has serious implications for the fuel industry’s future, and it will be interesting to see how it affects things in the coming years.

November 2020: Despite the ongoing devastation of the second wave of COVID-19 and the uncertainty following the election, prices started to rebound in November. Following the news of a successful vaccine, prices began rising. The national average of gasoline rose to $2.12/gal due to an 18% increase in oil price.

December 2020: As we closed out the year, prices remained lower than in the past. They dip and climb but are slowly inching higher. GasBuddy analyst Patrick DeHaan has said that “a weakening US dollar and vaccine optimism continue to push oil prices higher.” There is hope that prices will continue to climb for the fuel industry, but consumers can get on lower than average prices for some time to come.

If the past year has taught oil and fuel analysts anything, you can’t quite predict what will happen in the market. Last year at this time, analysts were optimistic. This year, we’re all holding our breath to wait and see how things may change. As President-Elect Biden takes office in January, things may continue to change as his administration pursues their energy agenda. The ongoing distribution of the COVID-19 vaccine may return our lives to some semblance of normalcy, but it is likely the economic fallout of the pandemic will last for years to come.

Please remember that we are here for all your fuel and lubricant needs, whatever this next year brings. We’ve all struggled this past year. We renew our commitment to provide the best fuel and lubricant supplies to our customers and the local community. Let’s hope that this next year will be a little brighter than the last, and we can begin to rebuild after such a devastating year.