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Reuters: “Historic oil crash will not crash gas prices at the pump”

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Posted: Tuesday, April 21, 2020. 3:55 pm CST.

By BBN Staff: On Monday, the United States benchmark price for oil suffered a historic crash falling below $0 a barrel; however, Reuters explains that the level of decline seen in oil trading will not be reflected in the price per gallon of gasoline at the pumps.

In its article “Explainer: What s a negative crude future and does it mean anything for consumers,” Reuters explains that the crash in the price of West Texas Intermediate Crude, which his the benchmark price for US oil, was the result of the market being overstocked with oil while the demand plummeted due to the COVID-19 pandemic effectively suspending travel around the world.

Reuters’ article contained information from Tom Kloza, a veteran analyst with Oil Price Information Services who said that the price of fuel at the pump will decline but is not expected to match the level of the oil price crash.

“We’ll continue to see gasoline prices, diesel prices and jet fuel prices drift lower into May but one shouldn’t conclude that we’re going to see fuel given away or that we’re going to match these incredible, unprecedented drops we saw in crude oil today,” Kloza said.

He also noted that the price of aircraft fuel will also go down which will offer some support to airlines that continue to offer flights despite them being practically empty.

Meanwhile, the impact of the crash is expected to have even less of an impact in Belize as historic data from the Government of Belize shows that the major factors driving up the price of fuel are the tax charged on the landing cost of the fuel when it reaches in the country. Random sampling from the data shows that in March of 2009 the landing cost per gallon of fuel stood at $2.91, once the taxes were
added the end cost was $5.62. Similarly when the landing cost was $7.22 in April of 2011, the end cost $12.13.

 

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