Expert: Gas prices will plunge below $2 by the end of March

Drivers already are paying less at the pump this winter, but prices are about to plummet even more.

The U.S. average price of gas was $2.34 per gallon on Tuesday, down 8 cents from $2.42 a week ago, according to GasBuddy, an online gas price tracker. But prices are expected to drop below $2 a gallon by the end of March, according to the company’s forecast model, with the cheapest gas at $1.85 in the Great Lakes states and the Midwest.

The prediction comes as a price war heats up between two of the largest oil-producing countries and as the spread of the coronavirus continues to strain global travel. 

An employee wearing a face mask fills up a car at a gas station in Bangkok on March 9, 2020, as the rapidly spreading coronavirus fans fears over the global economy. (Photo: MLADEN ANTONOV/AFP via Getty Images)

“This is unprecedented,” Allison Mac, a spokeswoman for GasBuddy, told Yahoo Money. “Not to sound cliche, but nothing like this has ever really happened before, given the coronavirus as well as a price war between Saudi Arabia and Russia.”

Read more: Coronavirus and travel: What you need to know

This weekend, Saudi Arabia and Russia failed to negotiate a pathway to curb oil output in an already oversaturated market. Rather than compromise, Russia’s refusal to temper oil production led Saudi Arabia to flood the market instead, depressing oil prices.

The price of crude oil plunged 22% to $32.54 per barrel on Sunday from Friday’s close of $41.57. It’s only recovered 3.5% on Tuesday.

‘Fearful of being out and about’

Before the spat between the countries, oil had already been on a downslide since mid-February because of the ripple effects from the coronavirus, or COVID-19. China, the world’s second-biggest oil consumer behind the United States, has decreased its consumption after shutting down much of its economy to contain the disease.

Graph credit: GasBuddy.com

As the virus has spread to Europe, Australia, Africa, South America, and North America, many governments are advising their citizens to adjust their travel plans to varying degrees. People across the world are trying to mitigate their exposure risk by remaining home and avoiding highly trafficked spaces like airports, movie theaters, restaurants, amusement parks, and malls. 

“This is definitely a situation where people are just fearful of being out and about,” Mac said.

Summer gas could be cheaper, too

With nearly 330 million Americans staying put, that means the country’s collective consumption of gasoline — which is derived from oil — is creating a paradox. Lower gas prices tend to encourage people to travel by car or plane, but fear of coronavirus exposure may demotivate many from going anywhere.  

A paramedic on call puts on protective gear as a precaution against the spread of the novel coronavirus in the garage of the Mohacs street station of the National Ambulance Service Budapest, Hungary, Tuesday, March 10, 2020. (Photo: Zoltan Balogh/MTI via AP)

If the sharp decline in oil remains, “that's going to mean spring and summer gas prices likely to be cheaper than last year,” Jeanette Casselano, an AAA spokeswoman, told Yahoo Money. 

For those who remain undeterred to travel, now’s the time to take advantage of low prices and take that flight or road trip. 

“But definitely wipe down the gas pump while you're filling up,” Mac said, “because that gas pump is full of germs.” 

Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. She can be reached at stephanie.asymkos@yahoofinance.com. Follow her on Twitter @SJAsymkos.

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