Gasoline
becomes family pay raise
By Jim Killebrew
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[January 06, 2015]
I
just learned in my home-town of Muskogee, Oklahoma the price of a
gallon of gas is only $1.69. The Bakken formation in North Dakota
has created enough oil production to raise the states gross domestic
product (GDP) per capita to 29% above the national average. This has
created a steady flow of oil in the United States that is helping to
gain independence from the Oil Cartel of the Middle East and other
countries like Venezuela. |
![](http://archives.lincolndailynews.com/2015/Jan/06/images/ads/current/melocreme_bcv_122007.png) The fracking process has become widespread
in oil production. Fracking is a process
that creates fractures in the rocks and rock
formations as water or other fluids are
forcefully injected into the cracks in the
ground to open the cracks further. Those
resulting larger fissures allow more oil to
be channeled into the wellbore from the rock
formations, this allows the oil to be
extracted more easily. This process has
opened up hundreds of dormant oil wells
across the country. Along with the new
discoveries with newer oil fields on private
property, it has created an oil boom that
has driven the price of oil down even
further. Taken together, the deflation of
price of oil per barrel by the Middle East
Oil Cartel, and the increased production in
the United States, the result is the
reduction of price for gasoline.
![](http://archives.lincolndailynews.com/2015/Jan/06/images/ads/current/tcb_lda_042814.png)
It was reported on January 5, 2015 that the
price of oil fell below the $50. mark for
the first time in five years. Combined with
this, Russia and Iraq have increased their
production at the lower prices as well. For
sure, it has caused the price of gasoline to
continue to plunge in price. For the driving
American this has resulted in a form of
stimulus plan that is allowing the average
citizen to have more money in his wallet
that he is not paying in higher gas prices.
It leaves more cash to spend in other areas
of life. There are some negative
consequences that are being experienced as
well.
With the falling oil prices it has affected
the stock market. Since there are so many
stocks that are dependent on the price of
fuel, we saw the stock market plunge over
300 points on Monday. The Dow fell in
relation to the lower price of oil having
reached a price of under $50. So even if the
citizens who are not participating in the
stock market, the losses will eventually
have a devastating effect in the long-run.
This is especially true with those whose
pensions are tied to the rise and fall of
the Market.
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In the distance we hear the politicians,
including the President, claiming some credit for the falling
gasoline prices. A claim for the turning of the economy that is
increasing employment numbers and lowering the price of gas has been
touted. In reality, however, the Administration in Washington has
placed a moratorium on oil production on all public lands and
off-shore drilling. Additionally, they have virtually waged war
against the American coal industry. The President has completely
blocked the building of the Key Stone pipeline through a series of
"extended studies" to determine the impact on environment. This in
the face of hundreds of pipelines that already exist that have not
shown an environmental hazard.
Consequently, with all the activity of the oil cost reduction it has
caused a raise for every driver in America. Households have been
experiencing a fuel bill that rivaled their house payments or
grocery bill. So with the reduction of gas prices there has been a
breather that has allowed families to keep more of their wages to
spend on other things. We need to be prepared, however, to
understand it will likely be only a temporary condition. It may be
the OPEC producers are in a phase to actually inhibit the production
of oil in America.
The truth is, OPEC could continue to keep the prices low for a long
time. In that case it will be unprofitable to continue with the
fracking production, thereby reducing the amount of oil produced.
Keeping the oil prices down has ramifications for the overall
economy, not all of which is positive. In the short-fall it is a
good thing for consumers; in the long-term it may create a drop in
the economy, especially if the prices begin to soar once again.
Let's hope the prices are stabilized over time and the political
structure changes to allow for the production of fuel and other
energy to infuse more, and higher paying, jobs in the economy.
[By JIM KILLEBREW]
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