Why is gas so cheap? Due to COVID 19? If so, why?
There is a battle between Russia and Saudi Arabi about controlling oil supply.
All prices are determined simply determined by supply and demand. When the supply is great it drives prices down. Just the opposite when the supply is scarce. That is why businesses were able to charge higher prices for toilet paper and why some were hoarding not only for themselves but to sell.
That's the whole concept and problem with OPEC. They all get together to fix prices. This is called colluding which is illegal in the U.S. Business competitors can collude to fix prices by agreeing to control the supply and therefore the demand. The problem with this and Opec is the temptation to break from the pack. If we all agree to sell a certain product for $100 per item, if I secretly lower my price to $90 each everyone will buy from me and I more than make for that $10 loss through sheer volume.
With oil, coupled with the fact that Russia doesn't want to raise prices because they don't want to lose more sales, with the corona virus people are driving far less than they use it. Same with the airlines, ships, and trucks. So demand is going way down even more forcing prices down. I currently work for TD Ameritrade and many consider oil now to be a good investment. It's at the lowest price since the 50s and many believe that there is no way it's going to stay at $20 a barrel when the normal price is around $60/barrel going as high as $114/barrel.
There's a trade-off as with all things. That's good for the consumer but not for the oil and energy producers.
I minored in economics in college.
