How Will Lowered Gas Prices Affect Our Future Economy? -- Auto & Car Insurance Articles, Topics on Autos and Auto Related Information

How Will Lowered Gas Prices Affect Our Future Economy?

Monday, February 23rd, 2009 12:09 pm

As the economy continued with its downward spiral, one “positive” side effect of businesses closing their doors was the reduction in gas prices. After all, with less businesses in operation, there was a decreased demand for oil, which resulted in paying less at the gas pump. Of course, ask anyone who lost his or her job during this economic crunch and that person will certainly tell you that he or she would be willing to pay the higher gas prices again if it meant having a job.

To make matters worse, many areas have been reporting an upward trend in their gas prices over the last several weeks. In fact, according to the Orlando Sentinel, the AAA Auto Club South reported that national gas prices fell $0.05 last week. This drop in price seems long overdue, however, as both OPEC and U.S. refineries have reduced production and the demand is still less than the supply.

“For the first time in 2008 we are seeing gasoline prices moving in concert with crude oil prices,” Gregg Laskoski, who is the managing directory of public relations for AAA Auto Club South, was reported as saying in the Orlando Sentinel.

Yet, despite the national drop in gasoline prices, Biz Journals reports that the Automobile Club of Southern California’s Weekend Gas Watch has determined that gas prices have steadily gone up in Southern California for the past nine weeks. The Auto Club reports that gas prices in the Los-Angeles-Long Beach area rose 5.3 cents over the past week to $2,269 per gallon. Nonetheless, this is still 88 cents less than residents were paying at the pump a year ago. The same trend holds true for other parts of Southern California as well. Still, the Auto Club is hopeful that Southern California will also see a decrease in prices soon.

“If the wholesale price slump continues, that could translate into good news at the pump for drivers,” said Jeffrey Spring, Auto Club Spokesperson, in a statement.

But, are lower gas prices really “good” for consumers? While they certainly reduce the financial strain that many are currently experiencing, others worry about the long term effects of lower gas prices. After all, one of the positive side effects of the high prices was the fact that consumers were utilizing public transportation and the government was looking closely at alternative fuel options, all of which would be designed to decrease our dependency upon oil. Now, all of the gas-guzzling trucks that were on the side of the road with “For Sale” signs are being driven by consumers who are taking advantage of the low gas prices. How will this trend effect our economy and our dependency upon oil in the long run?

“American voters and leaders need to act as though gas were still $4 a gallon and put in place policies and spending priorities that will enable us to survive $5 or even $10 a gallon gas. We must work, play, eat, build, live and legislate as though we will be scraping the bottom of the oil barrel in a decade,” said Erica Etelson, who is the founder of the Berkeley Oil Independence Task Force, in her editorial published in The Christian Science Monitor. “With a growing world population that is ever more hungry for oil, it is just a matter of time before demand outstrips supply. The only sensible way to prepare for this is to stretch global reserves, making them last long enough to develop alternatives.”

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