Everyone is enjoying the break in high prices at the gas pump. The questions on the minds of every consumer are why did the prices drop so fast and how long will it last? Prices are expected to fall an additional 10 to 15 cents per gallon before leveling off. Does this mean that it will begin the steady rise in price again? That is not necessarily how this will play out. The reasons behind the dramatic drop in price might signal a steady lowered rate, at least for the foreseeable future.
Why Gas Prices Dropped
Typically the price at the gas pump tends to jump when there is political unrest and civil wars going on in areas that produce large oil supplies. This is because the price of each barrel of oil tends to skyrocket due to disruptions in pumping or transport, but this has not been the case this time around.
The pain experienced of $4.00 and $5.00 per gallon gas prices in recent months has really driven down demand for petroleum based fuels. People have found a way to dramatically reduce the amount used. Domestic oil production by methods such as fracking has also had a large impact on availability. More oil at cheaper rates equals lower gas prices.
How Long Will Prices Stay Low?
The very nature of the price drop could signal a long-term comfortable rate, but it is somewhat dependent on people remaining firm in gas conservation modes of thinking. If the demand begins to spike it could start to climb in price again. If domestic oil production remains at current levels, or increases the prices could settle at the $3.50 per gallon mark nationwide for a long time to come.
Impact of Lower Gas Prices on the Economy
There have some economists that warn that constant lower prices will adversely affect the economy in areas that are oil dependent, but this is not necessarily the case. That might have been a concern in the past when there was more dependency on foreign oil resources, but the increase in domestic production means job security for those in the oil and gas industry. Unless there is an interruption in supply then the current levels of demand will keep the industry strong.
A lowered price in gas also means that people can get out and travel more to visit friends, family and take vacations that have been shelved since record high prices hit the market. That means more people will be on the roads shopping, eating in restaurants and staying at hotels. It could mean a definite surge in the economy that has not been seen in a few years.
Impact of Lower Gas Prices on the Environment
The lower prices may not mean the best outlook for the environment. Global warming concerns have never been more at the forefront of the public eye. At a time when carbon emissions could not have a more detrimental effect on the environment the cost of driving is going down. This means more petroleum products will be used and could add to the existing problem.
The price of gas at the pump may not get much lower than they are now, but the welcome break could not come at a better time. Maybe it is time to make plans to see everyone you have not been able to afford to see in a long time.