One year ago, the average cost of gas was around $3.18 per gallon. Today, it’s $2.92, which is the lowest it has been in four years, and drivers all over the country are reaping in the benefits.
Prices usually drop around this time of year, but not nearly this low (we have low oil prices and a soft global demand to thank for that). But what could low gas prices mean for consumers and the economy in the future?
The Good
So far, the dropping cost has increased the sales of trucks and SUVs. Since consumers are more comfortable with gas prices, they’ve become more comfortable with vehicles that aren’t centered on low gas mileage.
Because drivers are saving money at the pump, they’ll be encouraged to spend it on other things like food, clothing, appliances, etc. Overall, this could give our economy a short boost of stimulation.
The push for renewable sources like solar and wind energy shouldn’t see any sort of impact. While oil and renewable energy once affected each other, they hardly do in today’s energy markets.
The Bad
When gas prices drop, oil drilling slows, and in states that focus on oil production, such as Wyoming, Texas, and North Dakota, lower gas prices could mean fewer jobs, cut projects, and less revenue for local governments.
Because consumers are buying trucks and SUVs, they’re no longer as interested in electric cars and electric car sales are declining.
In addition to gas, the cost of jet fuel is also at a low, however, flyers probably won’t see a decline in airfare. This is because people buy tickets in advance and airlines don’t want to sell tickets at a low fuel price, then lose money on the day that person flies because fuel prices are back up.
Many oil companies on the stock market have seen losses when it comes to their stock prices, and the trend could continue until gas prices are back to “normal.”
So… what do you think of these low gas prices?
