Gas Prices Reach Three-Year Low
Most U.S. gas stations will boast prices below $3 a gallon for the first time in a long while. But the relief that American consumers will be feeling before the holidays has experts saying that it could stall the country's energy boom.
The U.S. economy does unquestionably make gains from cheaper oil prices, such as increases in traveling which lead to subsequent purchases that help keep many businesses open. However, lower prices have caused economists to wonder if this will hurt domestic producers, whose profits are also being lowered.
Past high oil prices have allowed costly drilling techniques such as hydraulic fracturing more viable options, leading to a small resurgence of U.S.-based oil. Now these oil productions could be stunted by lower prices at the pump.
"It creates winners and losers," David Rosenberg, chief economist at money-management firm Gluskin Sheff & Associates, told the Wall Street Journal. "But with or without a shale-gas revolution, the U.S. economy comes out a winner."
The national average for regular gasoline prices fell to $3.04 per gallon Monday, reaching a four-year low according to auto club AAA. 55 percent of all gas stations sold below $3 a gallon, a total which hasn't been reached since December 2010.
These prices are 25 percent lower than they were in mid-June, since oil fell below $80 a barrel Monday as well. This drop comes after "the longest period of high oil prices in the history of the United States," according to energy economist James Williams.
Williams added that he is also worried about the possible negative effects on domestic crude-oil production, which has grown 50 percent since 2010.
"Unless the prices reverse, we're going to see a substantial impact on what has been the hottest growth sector in the last four years," he said.
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