Recent low gas prices may not mean a better economy

Recent low gas prices may not mean a better economy

By GABRIELLE MARTIN, Staff Reporter.

For most people, lower gas prices are a great thing. After all, less money spent at the pump means more money in your pocket to buy things that you actually want to spend your money on.

“It’s good mentally to know that you can travel places without having to break your pockets for gas,” says Laurence Dunn, a Health Science major at Delta College.

With Michigan in the top 15 states for lowest gas prices, according to gasbuddy.com, many people would think that the extra money being saved on gas will give the economy here the boost that it needs.

“It might boost the economy a little bit because people will be able to work,” says Delta Nursing student Sherri Reinert. “Some people aren’t working because they can’t afford the gas.”

Associate Professor of Economics at Delta College, Eric “Q” Beckman, isn’t quite as optimistic.

“The positives and the negatives kind of offset each other in my mind,” says Beckman. With the cost of oil being so low, some U.S. based refineries won’t be able to stay open. People from Michigan who used to go work in North Dakota or Texas at these refineries will now be without jobs. That means that the money they brought home, to Michigan, and spent is now not coming into the state economy. In addition, these people being without jobs will put more pressure on the Michigan job market, says Beckman.

In addition, the money that the average person is saving at the pump isn’t amounting to all that much.

“People overestimate how much gas they actually use,” says Beckman. “For the typical household, they aren’t saving that much.” However, he thinks that the money people are saving, they are spending, which is good news for the state economy.

A fear that Beckman has is that with cheaper gas prices, especially in the future, people will buy bigger vehicles and research on smarter ways to fuel vehicles will come to a halt. For people who already have or plan to buy the large trucks and SUVs, Beckman doesn’t have a positive outlook for gas prices staying down.

“It’s unsustainably low, at least that’s my opinion on it. The price of gas, the price of oil is unsustainably low.”

According to the United States Energy Information Administration projections, the average price of a gallon of gas in the United States will be $2.41 in Aug of this year. By Aug of 2016, the price will be at $2.88 per gallon.