Coronavirus causes lower gas prices due to over-supply

Coronavirus causes lower gas prices

TYLER, Texas (KLTV) - Coronavirus is not just affecting health, but also the economy.

Dr. Harold Doty, a professor of management at UT Tyler said the virus is the main reason for low gas prices right now.

Prices at gas stations across Lindale averaged $1.88 per gallon, the cheapest across East Texas and Deep East Texas.

“We have people coming from Longview, Louisiana, Dallas; everywhere around here, just to get our gas prices,” said Amy Garcia, a cashier at Raceway gas station in Lindale.

According to AAA Texas, the national average price for regular fuel is $2.43/gallon and in Texas, the average is $2.08/gallon.

In Tyler, the average is $2.04/gallon — four cents cheaper than last week.

According to Gas Buddy, the average in Lufkin is $2.07/gallon and in Nacogdoches, it’s $2.12/gallon.

While these prices are higher than this time last year, they are steadily decreasing from this time last week.

Doty said for the first time in a decade, the last quarter saw a decrease in global demand for oil.

He said with the usual increase in demand, the current global over-supply should’ve balanced out by the end of 2020. Due to the coronavirus, there’s a significant reduction in the Chinese economy, causing a large over-supply.

This over-supply is the reason we’re seeing rapid price drops right now.

According to a AAA Texas spokesperson, market analysts will continue to keep an eye on the decision from the Organization of Petroleum Exporting Counties (OPEC) to see if they decide to cut crude oil production down due to the impact the coronavirus is having on the demand.

Doty said at this point, he doesn’t know what to expect for gas prices going forward. He said it heavily depends on whether the coronavirus becomes a global pandemic or if the Chinese economy bounces back relatively quickly.

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