You won’t find many people on the street complaining about the price of gasoline which means we Minnesotans have only the nice weather to complain about now. Unseasonably warm temperatures have lead to poor ice for fishing and little snow for winter sports. Yes, a cold, snowy week or two is just what we need to kick in our winter-based economy and begin a new discussion on the topic of too much cold and too much snow. But we digress. Gas is cheap and that has been a nice thing! Here are some reasons as to why gasoline hovers around a comfortable $2 per gallon today.
- The world’s top oil exporter, Saudi Arabia, along with OPEC (the Organization of Petroleum Exporting Countries) made a 2014 strategic marketing decision to support and increase market share in oil exports by selling at a low price rather than cutting production to increase oil price. This is a 180 degree “about face” compared to the 1973 oil embargo which saw OPEC withhold world oil exports making for unprecedented price spikes and even rationing. This swing in policy is a strange but real aspect of free markets and certainly a “win” for consumers today.
- An underlying aspect to the aforementioned phenomenon was the fact that the demand for imported oil has been decreasing. S. Energy Information Administration data reveals oil imports to the U.S. from Saudi Arabia were 2.2 million barrels per day in 2003 and just over 1 million barrels per day in 2014. While the economy is a major impact on energy demand, it would be remiss to overlook the effect of efficiencies seen in transportation. The average passenger car in 1973 achieved 13 miles per gallon compared to an average of 36 miles per gallon for this category 40 years later! Good job Detroit!
- Receiving even less credit for low gas prices than a Chevy Cruz is the average S. energy consumer. Today, people want and demand high mileage vehicles, well-insulated homes and energy efficient appliances. Even young school children are aware of energy saving practices such as turning off lights and using less water. Fact is U.S. consumers spends half (in comparable dollars) on the purchase of energy today than we did 40 years ago!
Congratulations to you!