Gas prices have plunged in recent weeks, and many around the country are continuing to enjoy record lows well into 2015. According to GasBuddy, an online service and app that analyzes gas prices, the state average for Arkansas is leveling out at just under $2 per gallon.
The cause of the drop in oil prices is too much supply, too little demand. With an increase in oil production and a boom in shale fracking across the United States, the world market is bubbling over with oil. Moreover, the Middle Eastern oil monopoly, the Organization of the Petroleum Exporting Countries (OPEC), has refused to decrease its rate of oil production.
Now, the market is drowning in oil, and, as basic economics demands, the price of gas has been driven to the lowest average cost since 2009.
This shift in prices could not be better for freshman Pierce Fonville.
“I saved around $25,” Fonville said regarding his trip to Harding from Fort Worth, Texas.
According to Diane Swonk, the chief economist at Mesirow Financial, America’s population as a whole is projected to save billions of dollars in 2015 on account of cheap gas. Swonk also said in the Mesirow blog, “low prices at the gas pump have been a lifeline when wages have fallen short for too many households.”
However, the benefits of the masses come at the cost of the few. The economy surrounding the oil industry has taken a financial beating because of the dip in value. The solution to the shortage of money means limiting the budget, and limiting the budget can lead to downsizing.
According to KERA News, this spells bad news for Texas. Being one of the largest oil producers in the country has potential for a state, but the unpredictability of the economy can send even the biggest monopolies running for the hills. Thousands of employees have already been let go on account of the still-plummeting gas prices, and more layoffs are expected.
Fonville said he remains hopeful for his home state, comparing the process to pruning a tree.
“It’s a reciprocal system,” Fonville said. “Those jobs are going somewhere else, hopefully in America.”
Phil Flynn, a senior energy analyst at Fox News, disagreed. He referred to the dropping cost as a “price shock” that can “do real damage to the economy.” Should OPEC’s intentional continuation of oil production go on for too long, oil production in the U.S. could come to all but a stand still, and more jobs could be lost. Thus, OPEC can regain its former totalitarian control over the oil market. Flynn referred to cheap gas as a good thing only if the prices are a result of American growth and stability in the economy. However, he said “when cartels move to actively manipulate prices to try to force competitors out of business and dump oil into an oversupplied market it causes undue strain and a shock to the economic system.”
GasBuddy estimates that each household will save an average of $750 this year.
