OPEC Ensures Fuel Prices To Remain Low
The price of gasoline is expected to drift lower in the wake of the Organization of Petroleum Exporting Countries’ (OPEC) decision to maintain production at its current level. Not only are prices expected to remain low, the decision could have far-reaching effects around the world.
In fact, the OPEC decision on Thanksgiving Day could lower the price of gasoline throughout 2014 and into 2016, if OPEC doesn’t reverse course and the lower prices don’t undercut the drilling boom in the U.S. It also could become a challenge for carmakers, which are facing pressure to boost fuel economy of all new vehicles and possibly a global recession from what has become a reverse oil shock.
The AAA Daily Gas Gauge showed gasoline dropping to $2.769 on the first day of December from $2.776 over the weekend. The pump price for regular gasoline is now down 50 cents per gallon from a year ago and prices are expected to fall again.
The OPEC decision also has rattled the global energy markets and undercut the value of oil giants worldwide. Oil prices fell to their lowest level in five years in early-December, according to Reuters.
While the drop in oil prices is expected to boost consumer spending in the U.S. and elsewhere, analysts also worry the drop in prices could touch off a deflationary spiral that would reduce the prices of other commodities and undermine the prospects for growth in key parts of the global economy.