They’re the lowest since 2009. Will they keep going lower, stay low, or should you expect a rise? Find out in this post from Payless Power.
If you’re an energy-saving lover, then you’ve surely noticed the amazingly lower prices at the pump. In the last 6 months, the average price of gas in Texas has dropped from $3.47 to $1.96, according to this chart.
Why are Gas Prices Dropping So Much?
Nobody saw this coming. It’s happening for many reasons, and you could write a series of blog posts on why.
But, in a nutshell, here are a few reasons why:
- America’s oil production has skyrocketed since 2008 because of our ability to efficiently harvest oil from shale. We are now the globe’s top producer of natural gas because of this.
- Saudi Arabia is flooding the world’s markets with oil
- Demand for oil across the globe is falling, but the supply of oil is increasing
What Should You Expect in the Future?
As with anything related to the economy, no one really knows exactly what gas prices will continue to do in the future.
This expert thought prices may have bottomed out at around $3.12 per gallon.
One opinion is that they won’t stay below this level of $2.00 per gallon for too much longer. Eventually, the surplus of oil the US produces because of its ability to access oil in shale will get used up. At that time, prices will rise and stabilize.
The big exporters of oil, like Saudi Arabia, Iran, Russia, and Venezuela need oil to be at $90 per barrel or more so their economies and societies remain stable (at $2.00 per gallon, oil is around $50 per barrel now). That author continues to note that OPEC is flooding the market with oil to drive US companies out of business or to cut their shale drilling operations, and that it will succeed to some degree. He notes that natural gas was driven to $2 per mcf and that it took the US 2 years to recover from the shock – when prices rose back above $4.
But the good news is, comparatively low prices may last some time yet. For example, price tracking service GasBuddy.com predicts $2.64 as the average price per gallon for 2015. That’s still $1.25 or lower than what were used to.
Enjoy Your Energy Savings!
However you’ve chosen to increase your fuel efficiency in the past, it’s going to continue to pay off for you into the future. For now, enjoy the lower gas prices, and don’t get tempted to get back to using gas inefficiently. Prices will eventually rise again – it’s just a matter of when.