At the beginning of 2010, the price of oil was around $70 per barrel. By December 2010, the price had risen to about $120 per barrel. For most of the following years, the price of oil ranged between $100 and $125 and only once dropped slightly below $100 per barrel. This resulted in extremely high gas prices. It was not uncommon to see gas prices in the three to four dollar per gallon range. Most Americans were frustrated with the high gas prices. In August of 2014, oil prices began to fall dramatically. Today oil is in the $60 per barrel range. The cost of gas at the pump has dropped to the low three dollars per gallon range. While drivers are very happy about this, is this a good thing for our economy?
Some of the positive consequences of lower gas prices include lower cost of transportation. This is good for travelers and for consumers as the cost to ship goods is reduced. Some of the problems include shifting away from fuel efficient vehicles. When gas prices are high, consumers look to buy smaller and more fuel efficient vehicles, but when gas prices fall, consumers quickly forget their previous pain and begin to buy larger cars and trucks that consume more fuel and result in more pollution. This means less investment in alternative energy vehicles. Lower oil prices are also hurting gas companies as there is less overall demand resulting in lower stock prices. Lower stock prices means less employment opportunities and fewer purchases of goods and services from suppliers. Lower oil prices while positive in some instances have an effect on the economy which might possibly outweigh the benefits.
Do you think lower oil prices are good or bad for the economy?
Should the government create a program like putting a man on the moon but focused on developing alternative energy source so that U.S. could become independent of oil and the political problems associated with maintaining an oil supply?
If the U.S. is less dependent on Middle East oil, what will happen to those governments like Saudi Arabia that are dependent on oil as their only significant source of revenue?