Over the past few years, we've seen oil prices skyrocket to seemingly ridiculous heights. Many motorists remember the pain they felt when they had to pay over $10 just to get barely two gallons of fuel. The end of 2014, however, saw a steady decline of prices at the pump while United States stockpiles began to fill up to dangerously high levels. The first half of 2015 has seen moderate prices for most of the country - some places have topped off around the $3 mark, while others have sunk to nearly $2.25 per gallon.
And even though the summer season traditionally has higher gas prices due to an increase of traveling, it seems that the summer of 2015 will not see a severe jump. If anything, it looks like prices are falling even though the oil supply is falling, too. There's a supply and there's a demand, but prices continue to drop - what's the deal?
Drop by drop
So even though consumers may revel in these low prices and the benefits that come with cheaper fuel, IndustryWeek reported that U.S. reserves of crude oil and fuel are falling in tandem with the prices per barrel. At the time of this article, prices for oil have been falling consistently for seven weeks, recently closing at around $60 for a single barrel of crude, noted Market Realist.
So while Americans enjoy reaping the benefits such as cheaper airline tickets and less expensive shipping on goods, the reserves continue to empty out. Not only is this a very unusual trend, but it's one that seems to be confusing trade experts who see a high demand and falling reserves as a time to increase the prices. This healthy fluctuation happens all the time, IndustryWeek stated, but with the world so heavily stock-piled with reserves of oil, this new trend of lower prices regardless of the state of the stores could potentially be the new normal.
Economy gets a green light
With these low oil prices we are seeing an increase in activity elsewhere. According to Investor's Business Daily, the job market is steadily improving and people are loosening their purse strings and spending more money on retail items such as automobiles. After a long winter where people didn't feel like spending their hard-earned money on much of anything, this early summer reprieve is a very nice change of pace for the American economy.
Thanks to a healthy American dollar, a reinvigorated economy, low gas prices and a booming job market, U.S. citizens might experience a summer that rivals those before the Great Recession hit in 2008. And with all of these positive feelings toward the economy, supply chains for many industries may need to shift their gears into overdrive to keep up with the supply and demand of consumer goods, food services and large-ticket items such as washing machines and cars.
Of course, gas prices will not always stay this low - despite our best wishes - and this summer should be one where we revel in the opportunity to travel and purchase goods without sticker shock. How these prices will affect the market later on in the year remains a mystery, but let's hope there isn't a spike when the reserves get down too low and we're used to our national average of $2.80 per gallon. The holidays can be tough on their own and we don't need elevated gas prices after a low summer.