There are two types of people in this world, those who love low gas prices, and those who see the benefit of a strong energy sector and higher oil prices.
As an oilfield wife, my husband’s job has been at risk ever since prices began tumbling. Everyone working in this industry has been laid off or their coworkers have. I have seen different numbers, but anywhere from 122,000-200,000 people worldwide have lost their job since oil prices plummeted. I don’t expect people to pay high gas prices so my husband can have a job. The truth is that low oil prices aren’t good for my family or for yours and here is why.
Goldman Sachs has already forecast that the drop in oil prices will account for about 30 to 40 percent of a slowdown in economic growth. Most people don’t realize that the oil industry had a very large impact in helping this country out of the recession. A huge slowdown in our economy puts us right back where we were a few years ago. Slower economic growth equates to no hiring, no new jobs being created, and you are less likely to see a raise.
Oil brings in BILLIONS of dollars to our states and country in the form of tax revenue. Without this revenue many state budgets are going to be short. In order to compensate, budgets are cut and/or taxes are raised. Budget cuts mean less spending for the good of our economy and additional jobs lost in other industries. If budgets aren’t cut enough, then your taxes are raised to compensate for the loss of revenue. The impact on what you are saving at the pump is already started to be diminished since you aren’t getting a raise and your taxes are increasing. In fact, you haven’t really saved any money at all.
To make things better, in places like Houston, Texas we have already seen sales in real estate slow down and property values decrease. Slow real estate sales lower income for dozens of industries from real estate agents, insurance, and construction trades. National spending can be directly correlated to housing values. When your housing value increases, you spend more. When it decreases, you spend less. Our economy needs spending to thrive. At this point, your taxes might be increasing, property values may have decreased, and your income is not going up anytime soon. Jobs have been lost from all different industries, but you’ve saved some money at the pump. Woohoo!
According to Bernard Weinstein, associate director of Southern Methodist University’s Cox Maguire Energy Institute, the oilfield employs about 400,000 people. However, there are 9 MILLION people whose livelihoods are dependent upon what happens in oil and gas. For those 9 million people, they have been making less money and a lot of them are currently without work since oil prices have decreased. This equates to 9 million who are spending less in our local economies and paying less in taxes. Many people have left the industry completely because they couldn’t find a job. This puts thousands of people looking for work in other sectors, maybe even yours. Low oil prices just put more people on the ground vying for your job. You might want to quit reading this and get back to work.
One positive to low gas prices is it is supposed to encourage people to take money saved at the pump and spend it. Like I’ve mentioned previously, spending money is what our economy needs to stay strong. The only problem is people aren’t spending enough to counteract the negativity from the low oil prices. This is partly due to people believing that low oil prices are not here to stay.
Are you still with me so far? If so, let’s recap. You are happy about paying less at the pump and angry that these crazy oilfield folk expect you to pay high gas prices. It’s BLASPHEMY, but hold on a second – the story doesn’t end there. You save money at the pump, but our economy is weaker, your income won’t increase, taxes may become higher, your property values may have decreased, and your job security is less than it was a year or so ago. This is what low gas prices really mean and they are nothing to be excited about.