Oil Plunges Deeper

Oil prices continued to crash this week, reaching an 18-year low on Wednesday near $20 per barrel. Prices are being eviscerated as Saudi Arabia and Russia continue to pump at a record pace in an attempt to bankrupt one another and U.S. shale oil producers.

Meanwhile, travel restrictions and ongoing global economic concerns are destroying demand, which could leave the world awash in fuel.

As petroleum supplies rise and prices fall, so too are prices for gasoline, diesel fuel, and ethanol. This is crushing oil refineries and ethanol producers, forcing them to cut back on production, exacerbating the crude oil oversupply even further.

For farmers, ethanol plant cutbacks are a concern as nearly 40% of U.S. corn is used to make ethanol, leading to a sharp selloff in that grain this week. May corn futures neared a two-year low on Wednesday at $3.32 per bushel, and local prices near shuttered ethanol plants are dropping even faster.

Meanwhile, any businesses making long-term plans may find that the recent price drop may allow them to pre-order fuel or hedge future purchases on the futures markets at extremely low prices. Everyday Americans typically benefit from cheaper gasoline, but mileage has plummeted as Americans stay home, limiting the windfall of low-price fuel.