Gas prices were cheaper in the period from 2016 to 2020 due to a combination of factors that led to decreased demand and oversupply in the market. Here are the key reasons:
- COVID-19 Pandemic: The global COVID-19 pandemic significantly reduced fuel demand, which led to a price war between Russia and Saudi Arabia. This resulted in West Texas Intermediate oil futures dropping to -$37.63 a barrel in April 2020, causing gas prices to fall1.
- Global Economic Slowdown: The global economic slowdown that followed the pandemic further depressed demand for oil, leading to a decrease in gas prices1.
- OPEC Price War: In an effort to regain market share, OPEC and its allies engaged in a price war, which resulted in oil prices collapsing from $147 a barrel in July 2008 to $32 in December 2008 due to the global financial crisis. This oversupply of oil contributed to lower gas prices1.
- Shale Oil Boom and Bust Cycle: The shale oil boom in the United States added millions of barrels per day of oil and gas to the market, which OPEC responded to with a price war. This led to lower oil prices in 2015 and 20162.
- Government Intervention: In March 2020, the Trump administration allowed the sale of cheaper, less environmentally sound winter gasoline after May 1, which contributed to lower seasonal prices3.
In summary, gas prices were cheaper in the period from 2016 to 2020 due to a combination of factors such as the COVID-19 pandemic, global economic slowdown, OPEC price wars, the shale oil boom and bust cycle, and government intervention. These factors led to decreased demand and oversupply in the market, driving down gas prices.
8/4/2024 10:43am
