Gas prices across the U.S. have dropped nationwide to the lowest price since 2009. Just last week the prices dropped 11 cents on the east coast. In a recovering economy, this news is well received by Americans who have been feeling the pinch of rising costs. No one is happier than the “East Coasters,” as they are at least $1.00 higher than the national average of $2.13 a gallon. Boston is among the cities that are truly grateful for the price decrease.
It is not just the U.S. economy that is showing weakness. European markets are showing a decline as well as Asian markets. This being true, the demand for crude oil has dropped in a big way since June. This has caused the price to fall from around $108 per barrel to less than $50 a barrel in seven months. The nationwide drop in gas prices is reflective of the demand for crude oil.
Gas prices are under $2.00 in at least 15 states. States across the nation are enjoying the drop in price, and general consensus it that it is about time. These states paying between $1.79 – $1.99 per gallon are Missouri, Oklahoma, Kansas, Texas, New Mexico, Minnesota, Michigan, Colorado, Mississippi, South Carolina, Tennessee, Louisiana, Idaho, Ohio, and Iowa. Texas is the center of the world’s largest refineries. Alaska has the worst price because of the distance to ship the product. One year ago this would not have been the case in any of these states.
The Gulf of Mexico has some of the best oil fields in the world. This has been a good year weather-wise with a low hurricane count, and this has also contributed to the declining gas prices. Just one devastating storm could cripple oil rigs in minutes and create a price surge. Consumers got what they feel was a well deserved break in 2014 from hurricanes. In 2012, hurricanes were a big source of a significant rise in gas prices.
There are many predictions projecting that it will fall even lower. Oil prices have been falling for several reasons. Refineries in the United States purchase millions and millions of barrels of oil each day in order to supply the economy, which is huge. Even the smallest price tag change makes a big difference The war has gone this far because the global demand is taking a hit from signs of recession in Japan and Europe. China’s economy is also showing signs of slowing down. The battle between oil producers in Russia and Ukraine and OPEC nations over slowing production to maintain a higher price has worked to the advantage of U.S. gas buyers, as they have not been able to agree to date.
The attitude of people at the pump has changed as well. They are a lot nicer as they fill up, waiting their turn patiently, smiling, and actually having enough on-hand cash to pay for it. For many, it is a welcome change of pace to be fueling up a vehicle and actually leave somewhat satisfied with the value received.
The fact that the U.S. is producing and drilling more in the Gulf has allowed the country to increase supply every year since 2008. This increase is predicted to push prices even lower in 2015. This nationwide drop in gas prices is lending credence to the old truism that “What Goes Up Must Come Down.”
By Crystal Ball
Image courtesy of Mike Mozart – Flickr License