Sami Luke
OHS Press
Okemos HS
1st Place
Division 2, News Writing
News Story
Plummeting gas prices have left wallets thicker and dispositions higher for most American citizens. Gasoline prices are predicted to continue decreasing throughout 2015, with an estimated average cost of $2.62 a gallon according to CNBC.
“We will experience low energy prices that are derived from crude oil or natural gas probably through most of this year,” Dave Wakeland, owner of Wakeland Oil Co., said.
According to Bankrate, domestic oil production has increased since 2008. Bankrate stated that the Gulf of Mexico, which satisfies much of American oil needs, faced fewer storms in 2014, and those that did occur stayed away from the U.S.’s oil facilities.
Since then, the Organization of the Petroleum Exporting Countries (OPEC) halted restrictions on oil production, which shaped oil prices toward the end of 2014.
Gas prices, on average, have not been this low since 2009, according to USA Today.
As exciting as the numbers may be, there are some drawbacks. Russia’s economy is falling into a recession partially due to these inexpensive oil prices, according to USA Today. Russia’s currency has been devalued by low oil prices, with the exchange rate falling roughly 20 percent in 2014.
There has also been controversy about OPEC continuing the halt of oil restriction, according to USA Today.
“[OPEC] agrees essentially not to compete with each other and that’s mutually beneficial because it allows them to reduce the amount they produce, in order to control the price,” Kortney Whitmyer (Social Studies) said.
The current position of the stock market suggests that gas prices are taking a toll on the economy, according to The Daily Signal. A struggling economy is possibly related to a lower demand, in a market economy where supply and demand rules. Recent bouts of fuel efficiency in the last few years have also decreased the demand of oil.
Crude oil is a commodity and the supply is far greater than it ever has been, according to Wakeland.
“People aren’t buying as much gasoline as they used to,” Wakeland said.
However, environmentalists worry that if gas prices fall too low consumption will increase, downgrading the importance of alternate energy sources.
According to the Harvard University Center for the Environment, an environmentally friendly price range would be around $60 to $80 a barrel. On Jan. 5 2015, gas prices were $52 a barrel.
SUV sales are up and alternative fuel car sales are down likely as a result of low gas prices, according to NPR.
“It seems like a good thing but it doesn’t encourage the U.S. to become oil independent,” Conrad Schnepf (12), Earth Club President, said.
Typically, gas is cheaper during the winter months when the government can become somewhat lenient about clean air standards. According to Bankrate, refineries use cheaper hydrocarbons such as butane to produce gasoline during this time.
Weather can also be a deciding factor in oil prices.
The demand for oil was high in 2014 due to a cold and strenuous winter. However, weather conditions were milder early this winter, therefore lessening oil demands, according to Wakeland.