Many Austin County drivers have been breathing a sigh of relief as the price of gas has been dropping at the pump giving their wallets a much needed break. This, however, is not a local phenomenon. Nationwide, the price of gas has been falling. Gas hasn’t been this cheap in nearly four years, AAA released in a statement. So why the big price change?
Gas prices always fall in the autumn, as colder temperatures mean fewer people go on road and boat trips, but, today’s prices are way down even when compared with previous seasonal lows, as this graphic from AAA shows:
bankrate.com lists its 5 reasons as:
- People are driving less
- Cheaper gas blends are refined in winter
- The price of oil has been falling
- No major disasters
- Consumer confidence
But, answers 1, 2, 4, & 5 don’t explain the global impact that is happening. The biggest reason is #3. Business Week is stating that OPEC is in a “No-Win Situation” as such a large amount of oil is now being produced in the U.S. With the abundance of oil on the world market, OPEC is faced with a very real dilemma. They can cut their own production even more in a desperate attempt to prop up the price, thus yielding market share to the Americans. Or allow the price to fall, which essentially means giving up.
CNBC reports that U.S. oil production has risen by 1 million barrels per day (bpd) per year over the past year as strong oil prices led to a boom in shale oil production through fracking, a technique that uses high pressure to capture gas and oil trapped in deep rock. And that production is set to grow by an additional 963,000 bpd in 2015, according to the U.S. Energy Information Administration.
But, analysts told CNBC that the current decline in oil prices could start to deter investment in U.S. shale oil production immediately. This would presumably begin to slow the flow of oil from out of the U.S.
However long it does last, the lower gas prices continue to be a welcome sight for most in Austin County and the U.S overall.
