HOUSTON, Texas (KTRK) -- As businesses and travel are impacted by coronavirus fears, the oil market has also taken a major hit. Overnight Monday, Russia and Saudi Arabia could not agree on how to deal with lower prices.
Saudi Arabia slashed prices and increased production and that's sent the oil market into a freefall. The price of a barrel of oil was down more than 20 percent and was trading around $30 a barrel early Monday morning. That could mean a 10 cent reduction in gasoline prices.
In Texas and across the United States, lower gas prices are usually welcome news. Many shale producers can't make a profit at the current price. The U.S. energy sector employs more than six million people, and for some producers, the sudden fall in oil could lead to layoffs.
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The Associated Press Deputy Markets Editor Seth Sutel has been watching the oil market and said the coronavirus scare has had a ripple effect on a wider scale, including oil and gas.
"What's going on with oil is the price has been falling because, as investors anticipate less travel, less demand for energy, fewer flights, less driving, few factories running, these require energy," Sutel said. "So, when demand for energy goes down, broadly, in the whole world like this, the price of oil goes down."
COVID-19 is threatening the global economy, presenting what some are calling "the greatest threat since the financial crisis."
Analysts believe oil is headed for its biggest one day decline in nearly 30 years.
Houston's average price of gasoline was $2.07 for regular unleaded, slightly lower than the statewide average of $2.38 a gallon Monday, according to AAA.
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Gas prices drop as the oil industry braces for trouble