By Reehan Siraj
It seems to be a normal day in the Upper Dublin Township. Whilst driving around the area, I look outside of the window of the car, seeing nothing too extraordinary. Some houses, some stores, a few nice cars. Then, I notice something strange. The gas prices have gone down quite a bit. I distinctly remember prices close to four dollars a gallon in June, and now, just months later, gas can be found at below three dollars. What in the world could have caused such a drop?
The demand for oil is at a low point. Oil prices, like those of many other products, are rather dependent on supply and demand. When people don’t need to buy oil, the prices drop. It’s as simple as that. The reason that the demand for oil has gone down is in part due to decreased economic activity. Throughout the world, economies seem to be weakening, which lowers the demand for oil. Other forms of energy usage are also becoming increasingly popular, which lowers the amount of oil which energy consumers will use. To top that off, many, many things are becoming more energy efficient, which significantly lowers the amount of energy needed.
America has just recently began producing huge quantities of oil, so the amount being imported has decreased. Even with less oil imports, there is still an excess of oil just laying around. Due to the much higher supply than demand, prices plummet. Despite America’s lower oil rate of consuming foreign oil, other oil producing countries are still producing approximately the same amount of oil as they were, further increasing the oil supply.
It has become increasingly hard for these countries, many of which have economies completely revolving around the oil business, to sell oil. This is negatively affecting the economy of these oil-producing nations. Countless countries, such as Iran, Russia, and Nigeria, are having trouble selling this oil and making reasonable profit off of it, which hinders the economies of these nations. Quite a few of these oil producing nations are still developing, and these challenges can have a lasting effect on how the economy grows.
In my personal opinion, sure, the falling oil prices seem great at first sight, but digging deeper into it reveals the true turmoil it is causing. While we reap the benefits of these lower gas prices, other countries have to pay the price. Their economies are being torn apart by it. Even here in the United States, some states are going to face economical struggles. Oil companies may go out of business due to an inability to make an adequate profit. Hopefully, time will heal the economies of many of the countries depending on oil, but until then, just enjoy the exceptionally low gas prices. They might not drop down this low again for a while.