SALT LAKE CITY — It’s hard to find a driver complaining about plummeting gas prices, but some economists warn plunging oil prices could present economic problems if the pattern continues beyond the short-term.
Oil has been trading around $56 a barrel for the past week, down by nearly half since June.
“If it stays there, it leads to all sorts of instability,” said James Wood, director of the University of Utah’s Bureau of Economic and Business Research.
Wood said if the trend continues, the losers will be oil-producing nations like Russia, Venezuela and Nigeria, and oil-producing companies.
States like Texas and North Dakota could see an impact, Wood said, as could high-cost oil production areas like Utah’s Uintah Basin and San Juan County.
“The Basin is particularly vulnerable to oil prices,” Wood said. “We need high oil prices for high levels of production out there.”
If it stays there, it leads to all sorts of instability.
–James Wood, director of the U. Bureau of Economic and Business Research.
Utah Petroleum Association President Lee Peacock expressed similar concerns, saying there could be a significant impact if the low oil price trajectory holds for the next six to 12 months.
"Companies won't change plans immediately, but if this hangs on longer term, it definitely will impact drilling plans,” Peacock said.
Conversely, the short-term appears much brighter.
Wood said gas prices have provided something of an economic stimulus to commuters.
According to AAA’s Daily Fuel Gauge Report, Utah’s statewide average for unleaded regular was $2.50 on Tuesday, down 16 cents in a week and 54 cents year-over-year. The national average of $2.37 was down 15 cents in a week and 88 cents for the year.
“Rather than oil company profits, it ends up as consumption by households,” Wood said. “It frees up income for other things, maybe even some savings.”
Drivers certainly have not complained as prices have dropped.
Cars lined up at Costco pumps in Salt Lake City as drivers tried to take advantage of gas costing below $1.96 per gallon.
“It’s amazing,” Amy Reed said.
Elsewhere, fueling up was far less painful than it has been in past months and years.
Lisa Chandler said she bought her hybrid car because of the past high gas prices.
“I commute from Ogden to Salt Lake every day,” Chandler said. “[The lower gas prices have] made a huge difference for me.”
Restaurant owner Michael Zdunich also could not complain about the cheaper gas prices.
“It’s awesome that our economy seems to have the gas prices low enough,” Zdunich said. “Hopefully that shows some spending in our Christmastime here.”
Andrew Adams is a multimedia journalist for KSL NewsRadio and KSL-TV. His work also regularly appears in the Deseret News. Email: firstname.lastname@example.org