As 2014 comes to a close, consumers have noticed a steep drop in gas prices. What's behind the improvement? Well, a combination of factors have actually led to the change.
According to a CBS News article, the national average price per gallon dropped below $3.00 this fall for the first time since 2004. Bob Darbelnet, CEO of AAA, commented on the price drops in a recent press statement.
"The steep decline in gas prices has helped to make driving less expensive for the vast majority of Americans who use their car every day. Many Americans are spending $10-$20 less to fill up the cars on every trip to the gas station compared to what they paid during the summer driving season."
The U.S. Energy Information Administration released a report, citing worldwide production increases and reduced demand. The United States now produces over 7.4 million barrels of oil per day. That's an increase of 32 percent over 2011. The EIA also predicts continued growth in oil production, with a forecast of 9.5 million barrels per day predicted for 2015.
According to Yahoo! News, worldwide demand has dropped recently as well. Economic downturns in Europe, Japan, and China has led to reduced use oil worldwide. This in turns leads to dropping prices, as the supply outweighs the demand.
Yahoo! also points out that while prices are far lower than in recent memory, the falling oil prices could wind up being bad news for Americans. As the price of crude oil continues to drop, OPEC countries are gambling that the higher cost for shale drilling in the United States will cause those companies to become unprofitable. Should that happen, the traditional oil producing countries would once again gain control over worldwide oil prices. Should that happen, Americans would be looking at both the loss of thousands of jobs, and increased gas prices.
Similar problems have already started popping up around the world. As reported by the Inquisitr, the drop in oil prices has caused a crises in the United Kingdom. Robin Allan, chairman of the independent explorers' association Brindex, told BBC News they are unable to make money with oil prices so low.
"It's almost impossible to make money at these oil prices. In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone."
Will the oil bubble burst? Will gas prices stabilize or even rise again? Time will tell.
[Photo courtesy of NPR]