Wallets relieved as gas prices drop

Many Americans are rejoicing at the pumps from the recent drop in gas prices, but major oil-exporting countries across the world may be bracing for possible economic hardships.

To date, gas prices in Oklahoma City have dropped as low as $2.47 per gallon and the trend is being seen across the globe. According to CBS News, the global price of oil is near $83 per barrel, down approximately $32 from the average cost per barrel; the lowest in four years.

For consumer driven economies like the United States, where consumer spending accounts for two-thirds of the economy, lower gas prices leaves more money in the pocket of spenders.

“Every day, Americans are spending over $100 million less on their gasoline purchases than they did a year ago, some of which will be injected back into the economy in other forms, and with the economic concerns taking shape lately, it could help jolt things back in the right direction,” Patrick DeHaan, senior petroleum analyst at GasBuddy.com said to KFOR.

College students are benefiting from the recent drop in gas prices as they prepare to travel home for the holidays.

“Personally, I am excited about gas prices dropping because I’m getting ready to drive to Colorado for Thanksgiving break, so it makes the drive less expensive,” junior Denali Hicks said. “It’s also kind of neat for me to compare the amount that prices have dropped here in Oklahoma compared to the amount they’ve dropped at home. Gas is still around $2.80 back home.”

The holiday season paired with lower gas prices may have retailers hopeful for better sales.

“American businesses – in fact, even global businesses – are always looking to take advantage of consumers having more disposable income,” Hicks said. “Since it is getting close to the holidays, I think this is especially true. Businesses will more than likely be expecting customers to spend more in the near future, which means that they will be competing to be where that consumer spends their extra disposable income.”

But as gas prices drop, economic issues can begin to rise in the oil-producing countries that depend on oil sales.

“The problem is that countries get accustomed to a certain level of income, and then spend,” Edward Chow, senior fellow at the Center for Strategic and International Studies, said to CBS News.

If the trend of steadily lower gas prices continue, OPEC and other exporters of oil will have to adjust their budgets or oil production, otherwise they risk overspending, since their government budgets are based on the expectation that gas will be around $100 per barrel.

Hicks said while Americans can appreciate the lower gas prices, they should also be aware about the economy of these major exporters.

“It’s nice to see America, as demanders of oil, to see such low oil prices,” Hicks said. “However, when looked at from a global standpoint, the effect that this dramatic price drop could have on the global economy is kind of frightening.”

KOCO recently reported a warning from the International Energy Agency on Wednesday, which stated gas below $3 a gallon can’t last much longer without damaging the U.S. oil boom and causing a problem with oil supply further down the road.

“The truth is that we live in a globalized world and as a result, occurrences in the economy of one country effect economies everywhere,” Hicks said. “We rely on other countries for trade and a number of other things and if these countries fall into economic trouble, it could hurt the American economy in a multitude of ways.”

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