Don’t celebrate the low prices at the pump just yet.
In a Time article, economists say the cause for the decrease in crude oil prices comes as a result of the economic slowdown experienced worldwide. This happened the last time there was a large-scale economic downswing (in the 1980s), though crude oil prices won’t dip nearly as much as back then given the worldwide increase in gas consumption since then, particularly over the last several years.
The demand for crude oil declined partly because of the increase of unemployment. The Time article said 60 percent of American drivers use their cars to go to work. If fewer people have jobs, fewer people need gas to drive to work.
The low gas prices aren’t necessarily because more oil is being produced; the dip in prices is caused by the worldwide economic downturn. So while it may feel great to finally pay less than $3.00 a gallon, it comes with its own implicit costs, which may be more threatening to our pocketbook in the long run than paying extra for gas.