by Jalil Boulahssas
While some people explain low gasoline prices with a simple “Thanks Obama”, oil prices have little to do with our president. Gas and diesel prices change as a result of crude oil prices. There are many factors that can influence a major change in crude oil prices like the the recent change that resulted in unleaded gas prices reaching a low of $1.97 at some stations.
Those who have to fill a tank may have noticed that current gas prices are leaving their wallets a little less empty. This is because crude oil has tanked below $50 per gallon, a surprising low resulting in rather happy motorists worldwide. In the U.S., the current average for regular gasoline is at a low $2.383 and the Virginia average is at an even lower $2.192. Gas prices haven’t been this low since the Great Recession.
Students and teachers in the area seem relieved by the current low, giving them extra money to spend somewhere other than at the pump. Sophomore Parker Novak said “I don’t struggle to pay for gas and usually have money left over for myself.”
Junior Andrew Arczynski addressed other positive economic results. “Lower gas prices also lower the cost of manufacturing and products, which helps strengthen our economy.”
The main reason behind low oil prices is that supplies are up and demand is down. Increases in oil production by the United States and Canada have resulted in a supply that outweighs global demand. “I don’t think oil will bottom out until a company or a country flinches and cuts production. Right now producers are still pumping as much as they can.” said Jeff Carbone, a senior partner at Cornerstone Financial Partners in Charlotte, North Carolina to The Washington Post. With many new sources, europe still fighting recession and alternative energy being so popular, oil sales not meeting expectations.
While gas prices have been significantly low throughout the first half of 2015, these rates are unsustainable. Crude oil prices were set at below $50 per gallon earlier this year but they are slowly and surely rising. Former Shell president told USA Today that “The next round of high prices is likely to start later this year, as crude rebounds to the $80s and $90s”. Tension and chaos in multiple middle eastern countries has already begun to drive oil prices slightly upwards. In the end, because it costs more than $50 to produce each barrel and the oil industry cannot function without high prices, we will likely see an equally significant rise in gasoline prices in the coming years, or even months ahead.
Photo by Jalil Boulahssas