How Low Can You Go? Falling Gas Prices Have Sinister Implications

Consumers may have noticed a surprise at the pump over the last few months as gas prices take a nosedive. This month, oil prices are starting to fall dramatically as well, with crude oil prices hovering around $50 per barrel, an important symbolic value. All roads lead to further drops in gas prices, which may sound great in the short term to people with small wallets and places to go, but it’s bad news in a number of ways, and not just for energy companies with plummeting stocks. The environment could take a big hit, too, and much of the progress made in the last decade in terms of developing alternative fuel vehicles and pushing for cleaner fuels may be undone.

One reason gas prices are falling is a growing supply of oil on the market, driven in part by the battle between the United States and Saudi Arabia, a massive producer of oil. The kingdom appears to be taking a long-term bet by continuing to supply the market with oil, rather than cutting back production. In the short term, this is going to cause some staggering financial hits for it and other oil producing countries, but in the long term, the kingdom is hoping, it will drive to decreases in energy production and a rise in oil prices that it can exploit.

The decision to pump oil into the market is a response to more aggressive oil and gas exploration, particularly in North America, where energy companies started exploring in the hopes of accessing less expensive oil, and the government encourages them in the name of energy independence. The United States in particular isn’t showing signs of slowing down on exploration and development of oil and gas projects despite the fall in prices, so the Saudi bet may be failing unless the kingdom can wait it out. Meanwhile, the environment suffers as projects like Keystone XL threaten vulnerable regions.

There’s another problem with the fall in gas prices: Consumers aren’t as interested in alternative fuel vehicles. Now is actually a great time to buy an alternative fuel vehicle or hybrid, because prices are being slashed by manufacturers in response to declining demand. In the long term, however, that means that manufacturers will be less interested in developing the next generation of alternative fuel products and vehicles, which is ominous for conservation. After the concerted push caused by high gas prices earlier in the 2000s, the fall in gas prices has consumers turning right back around and heading for the gas station. Already, SUVs are making a comeback, cluttering the roads once more with their extreme inefficiency and lumbering size.

While public transit costs, transportation costs and other expenses related to gas prices may drop in the coming months if gas prices stay low or drop even further, it’s definitely not an agreeable trade off for what we could be about to lose. An oil glut might benefit the Saudi Arabian market, but it will do enduring damage to the environment unless other nations are willing to take the kingdom’s bet or push back on the issue. Higher gas prices are better for the environment, even if they sting consumers at the moment. Ultimately, they’re even better for consumers as they contribute to the development of new energy tools that promote efficiency and alternative fuels. Without cost as a motivator, manufacturers may get lazy, and when gas prices rise again, consumers will be left holding the bag.

Photo credit: Andrew Taylor

144 comments

Carole R.
Carole R3 years ago

Thanks for posting.

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Siyus Copetallus
Siyus Copetallus3 years ago

Thank you for sharing.

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Sarah Hill
Sarah H3 years ago

I knew those great gas prices could not hold. They have been rising for a couple weeks. It was great while it lasted! But you know, they use oil in almost everything so it's not just the gas for our cars that is the problem.

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Gerald L.
Gerald L3 years ago

contd; So cold breakfast cereal, bacon, egg n' toast excorcism's with peanut butter & jelly sandwiches for supper. Yum ay'. And can't forget the green Kool Aid.

The new Delivery Charge on electricity probably trailed behind at 92% , of the energy charge. Hard to swallow all the green hype.

So basically consumers now have more income to spend on other STUFF. The beloved Oil Sands in Alberta are cancelling projects & laying off workers, American tradesman also. Pipeline expansions may become a pipe dream with less profits.

Northern Gateway to Kitamat BC's west coast for direct Oil Tanker Ship to Asia,
Kinder Morgan presently to Vancouver with a wider Right of Way & new large line for x-p to Asia
Energy East, coversion of old natural gas pipeline to New Brunswick & Portland Maine for x-p
Keystone XL to Texas Refineries, for export?

Why are we allowing Wall Street & Bay Street to exploit all our homeland resources when they are finite, which means we have a responsibility to consider ENERGY SECURITY? Future generations deserve a secure and healthy environment with stores of natural resources kept in inventory for the next 7 generations.

This drop in price and reduced tax incomes for government makes for a good opportunity to realize we should not have ALL our EGGS in ONE BASKET.

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Gerald L.
Gerald L3 years ago

@ Brian F. @ 6:35pm PST on Jan 11, 2015
We should make all SUV's and big F150 sport trucks illegal. I really can't understand why we allow these inefficient gas guzzling vehicles on the road. We could get off oil tomorrow, if we simply switched to electric cars... Electricity averages one third the cost of gas. Solar power systems on our homes could charge the electric cars at night, so we never have to go to a gas station.

Brian apparently there are 4 months of darkness in the Artic, I didn't know there are parts of the planet where the sun never sets at night. Using Storage Batteries to store daytime captured solar energy is likely impossible & just as wasteful in Carbon inputs and environmental impacts from battery materials, disposal problems etc.

The Province of Ontario with their Greed Energy Program, and FIT (Feed in Tariff) for Solar Farms paid 0.80 cents a Kw or 1500% for power above our Base Rate of 0.051 cents a Kilowatt before the $mart Meter$. So the Greed Kool Aid is swallowed with some greenwashing, or should I say brainwashing. The green is mostly about the ROI for the major owners of Solar & Wind Farms.

With Smart Meters it cost 98% more to cook breakfast & supper in the Winter Rate Schedule. So now they stated last week they want to raise the Peak Electricity Rates by X 4 or 5. That we have to change our habits. So cold breakfast cereal, bacon, egg n' toast excorcism's with peanut butter & jelly sandwiches for supper. Yum ay'. An

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Marc P.
Marc P3 years ago

Bartley D.& Dan B.: Thank you for your words. I sometimes excoriate people harshly on care 2, and I feel that it is well deserved. One cannot claim the ethical high ground if they slink away from their errors. I REALLY dislike being in the wrong! And the only way to right a wrong is to 1.) (Important) offer an apology 2. (More important) Take personal steps to ensure the same mistake does not recur. I appreciate your understanding!

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Carole L.
Carole L3 years ago

Maria L
“Carole L. - All I got to say to you proudly is "Oink, oink." Better a pig than a nutty treehugger. And yes, I do care about my contemporary pleasure much more than the one of the children I will never have. And by doing just that I'm actually doing more for this planet than most environmentalists.”

It's nice for you that you don't give a flying rats ass about fellow humans. I too chose to remain child free even so, I care for the futures of children born of others. As for hugging trees, if you've never tried it, don't knock it. Besides, trees scent is much better than diesel or gas fumes, and they don't kill brain cells when you sniff them. Maybe you don't need clean air to breathe or clean water to drink, other life-forms do. It's called co-existing which has always been my goal in this life. I don't know if you've noticed or not, you're not the only life-form on this planet. It's called behaving responsibly. I guess we'll see if you're still a proud oinker when the environment goes all to hell. Will you proudly proclaim “I did that!”

Maybe you could have a T-shirt made that says; "Proudly doing my part to destroy the enviroment." Just because one is child free does not give them the right to disregard children that are here.

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Kathryn M.
Kathryn M3 years ago

Thank you for this article.

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Bartley Deason
Bartley Deason3 years ago

Marc P.
If you perchance happen to read this comment, i want to say essentially the same as Dan B. wrote. It takes a unique, secure and confident person to admit when they are wrong. Your apology is, of course, accepted.
I have a habit of responding to other posters by writing their name first than writing XXXXX wrote: (copy and pasting from their comments, the part of their statement i am responding to) in quotation marks so others can see and know what i am referring to. Whose comment i am answering and what they said that i am either agreeing with or disputing. Then i go into my spew. I think i may be confusing people by doing so, because you are not the only person who has responded negatively.
Again, i admire those who admit their errors.

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William Moorman
William Moorman3 years ago

Thank You

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