I had my first sighting of a gallon of gas under $2.00 this morning on the way to work. It was $1.99 in the morning, and on my way home it had dropped to $1.95. If you had told me 5 or 6 months ago it would be under $2.00 now, I would not have believed you. Overall I am glad to see gas prices fall since people who have to drive a lot for work or other reasons and were struggling with the ridiculously high prices will keep a little more money in their pocket, and it also means lower heating costs for people up North who use heating oil during the winter.
But I am wondering if the plummet of gas prices is also partially due to the continued weakening of the economy. While I believe people are still conserving fuel due to the high prices over the last couple of years, I cannot help believe some of it is due to:
- People driving less because they lost their jobs
- Less commercial transportation (trucking, etc.) due to less retail spending
- Less flying
There are probably many other effects of the weakened economy that are influencing the slide of oil prices, and there are probably some other forces (such as the strengthening of the dollar over the last few months) that influencing the price as well.
Besides being an indicator of a bad economy, the falling prices could also probably cause a decrease in oil exploration, and production, causing a loss of jobs in the energy sector, and cause stock prices of energy sector companies to drag on the stock market as well. Will it also reduce the immediate need to explore alternative energy development? I don’t know, but I imagine it could.
What do you think of plummeting gas prices, both for you personally and for the economy as a whole?
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{ 6 comments… read them below or add one }
Tom - EconomicCrisisBlog.com 11.16.08 at 6:53 am
I just think ‘cheap petrol’
- I hope it keeps coming down!
RC 11.16.08 at 10:26 am
@Tom- I really like that it has dropped so much also, but it also worries me a little. I saw gas at $1.74/gal. yesterday!
fern 11.21.08 at 5:21 pm
i’m worried it may slow development of plug-ins and all-electric vehicles becus consumers have short memories. Drilling more is not the way to go.
I remember when gas was .29 a gallon. that’s right, my grandfather owned a gas station in New Jersey and i remember that price being on a metal sandwich sign he had by the roadside.. That was about 40 years ago!.
RC 11.23.08 at 12:55 pm
@fern- I worry about the people losing interest in that as well- hopefully the research and development of electric cars, both hybrids and plugins, will continue.
Mary@SimplyForties 11.26.08 at 11:02 am
I think people better enjoy it while it’s here because I don’t think it will last. Hopefully people will realize the transitory nature of the lower gas prices and hold firm on whatever gas saving habits they acquired due to higher prices. Unfortunately any downturn in the economy represents thousands of people hurting. Personally, I’d rather the gas prices stayed high to spur more gas savings and research into alternative fuels and technology.
RC 12.01.08 at 6:40 am
@Mary- I agree- I hope the low price of gas doesn’t change the conservation habits many people have developed, or cause research into new technologies to suffer.