Last Tuesday night, President Barack Obama declared “the state of our union is strong.” The sluggish economic recovery from the Great Recession continues to say otherwise, particularly here in Nevada, where the unemployment rate still ranks 48th nationally and many people haven’t rebounded from the housing crash.
Those fortunate enough to have kept their jobs, especially those in the private sector, may not have seen pay raises in years, while costs for nearly everything have gone up.
The price of gas, however, is the one exception, providing a huge point of relief that could grow this year.
As reported by USA Today’s Douglas A. McIntyre, the price of a gallon of gas is approaching $1.40 in some parts of the country, and if refinery capacity stays strong, the price could get down to $1 a gallon in those areas, a level not seen since before the turn of this century. That would indeed provide a reason to party like it’s 1999.
Granted, gas prices in Las Vegas average $2.45, well off the national average of $1.89. But there are points around town — particularly Costco and Sam’s Club — where it’s as low as $2.14. And CNBC reported that with the lifting of sanctions against Iran last weekend (whether that’s good foreign policy is an argument for another day), that country will begin ramping up crude oil exports too, which could further drive down oil prices.
The idea that oil is a fuel of the past is absurd. Peak oil? Today the question is how low oil prices can go. We don’t know where the floor is, because thanks to technologies such as hydraulic fracturing, we have no idea just how much oil is available — but we know it’s an awful lot.
The fracking boom was a driving force in the recovery from the Great Recession. In can be argued that fracking saved the economy. However, there is a drawback here: As the price of oil drops, it kills off fracking and well development jobs. That makes savings at the pump even more critical, offsetting those job losses.
But as gas prices continue to drop, the cost of doing business also decreases for many companies, which can lead to more investment by those companies, which obviously also helps offset job losses.
Lower gas prices benefit all of us and in fact can act as a net pay raise, putting hundreds more dollars per month into Nevadans’ pockets. That’s what can boost the economy. That’s what can make the president’s proclamation reality.