(Bloomberg) — In Fargo, North Dakota, cheap fuel has never been so unwelcome.
The Midwestern city is so awash in gasoline, the fuel last week sold for a record 12 cents a gallon at the rack — its last stop before the pump. In better times, the price dip would be a boon for gas station owners looking to snag low-cost supplies. But with fewer customers every day, gas pumps are becoming little more than makeshift storage for ballooning inventories.
“Our gasoline business has been cut in half,” said David Olson, general manager at family-owned RJ’s Gas Station near Fargo. Across town, Shaun Lugert estimates that sales at the station he owns have tumbled 80% in a month. “The biggest part for us that has been so hard is the unknown,” he said by phone. “It’s been kind of a roller coaster.”
The slump in rack prices, which are typically stable due to intense competition among distributors, is the latest sign that the coronavirus pandemic is wreaking havoc on every aspect of the fuel market. American gasoline consumption fell to the lowest level on record last week as lockdowns take drivers off the road while gasoline stockpiles rose to a record high. That’s caused rack prices across the U.S to collapse. Milwaukee this week beat out Fargo for the lowest price in the nation.
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“The local racks are just inundated with material,” said Patrick De Haan, head of petroleum analysis at GasBuddy. Some refineries may even be selling gasoline “at a break even or even a loss,” he said.