You’ve probably already seen it: people filling up their own barrels with gasoline, trying to take as much advantage of the lowered prices as possible.
While the $1.88 may look good at the pump, the oil surplus will have a lasting negative impact on the economy over all.
The New York Times recently said gas prices aren’t expected to rise anytime soon, reducing gasoline costs for the average household by $550 for the year, bringing them down to $1,962.
Everything from more domestic drilling, to less import, to the lack of global importing of oil in countries like China are taking blame for the latest surplus.
Whatever the reason, industries around the U.S. are already suffering in the aftermath.
Oil field layoffs are a new epidemic in Texas, because when prices drop, the incentive to drill stops. And the oil industry isn’t the only one in danger.
Today, the Wall Street Journal said, 756 workers at the US Steel Corp. will find out they are being let go. The company announced its idling of plants in Ohio and Texas, beginning the layoffs at the beginning of March because of the decreased demand of steel pipes and tubes for oil and gas exploration and drilling.
According to Kera News, Hercules Offshore of Houston said it is cutting 300 jobs, or 15 percent of its workforce, and the Federal Bureau of Labor Statistics said Texas lost 2,300 oil and gas jobs in October and November alone.
On the plus side, economic studies show that the more money there is to spend, the more we will spend it.
In fact, a direct correlation exists between the increase in traveling and the drop in gas prices. But is this just a cover up?
The surplus has some people looking warily at the past, specifically the 1980s “oil glut,” when the price of a barrel went from $100 to $27, and the idling of drilling rigs led to oilfield workers being laid off, causing a scare with bankers and damage on state spending.
In Texas, cities like Midland and Abilene suffered because of the “oil glut.”
Midland had one of the fastest-growing economies in 2014, according to USA Today in February of the same year, growing by 7.5 percent. As the prices drop, though, more and more workers are receiving pink slips on the oil fields, resembling the ’80s.
While we can do very little about the situation, it is important to keep an economical mindset as we smile at the dollars ticking by slower than usual while pumping gas.