Gas Drop

Why should we care about the reduced gas prices?

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Gas Drop

Gas prices in Germany reflect similar prices in America

Gas prices in Germany reflect similar prices in America

Creative Commons

Gas prices in Germany reflect similar prices in America

Creative Commons

Creative Commons

Gas prices in Germany reflect similar prices in America

Alexa Westlake, Editor

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Have you been to the pump lately? My fillup hasn’t been under $40 in years. Thanks, Obama! But now, gas is as low as $1.98 a gallon? Sweet! Have you ever stopped and pondered why? As it turns out, low prices at the pump reflect a whole complicated string of economics that go with the oil trade.

Simple explanation, more countries are finding more oil with new extraction methods like fracking. The supply is going up and to sweeten the deal, OPEC (the Organization of Petroleum Exporting Countries) isn’t manipulating the prices as much as in the past. According to Bankrate, prices aren’t as high thanks to Mother Nature giving us a break. With no big storms, oil rigs offshore can increase refining productivity.

As we all know from our econ classes, when supply outstrips demand, prices drop (Thank you Ms. Cob!). That’s basically what’s happening now–a lot of cheap oil is keeping gas prices way down.

That’s great for our wallets, but what does this mean for the United States economy? Well in the end, this means bad news for many small oil companies. With bigger companies overseas producing more and cheaper oil, local companies–and domestic jobs–will struggle. Sometimes, the price of gas is also the price of much needed jobs at home.

Low prices are also related to how we extract oil. Fracking has become a dirty word among environmental activists. The biggest issue that comes with fracking is the potential danger to our drinking water. When oil companies drill into the ground, they risk leaking oil and infecting our underground aquifers. As we know with our longstanding drought, that water is precious.

Digging for oil and other methods of extraction can be detrimental to the environment as well. Unearthed soil can dry out and lose nutrients; then impossible to farm and are therefore rendered as useless. The displaced nutrients can run off and cause an influx of nitrogen, which leads to algal blooms. These blooms absorb so much oxygen in streams and lakes which causes hypoxia, a lack of oxygen which kills many plants and animals in the ecosystem.

Cheap gas doesn’t sound so cool anymore, does it? Energy can be a touchy subject and there is no straightforward answer at this moment. Wind, solar, and hydro power can be alternatives, but society has become incredibly dependent on oil.

Long story short, oil in other countries costs the people here money and oil drilling here costs the people here their environment. Regardless of the pecuniary consequences, we should also be aware of the environmental cost. Carpool, walk, and bike! Save some cash and cut back on pollution. Your pockets and the earth will thank you later.

 

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