Oil Prices Are Record Low, But What Does That Really Mean?

Americans have been celebrating consistently low gas prices over the last few years, but how long can we hope for this to last? To find the answer, it is helpful to understand the large-scale factors at play behind the oil industry.

Crude oil is one of the most important natural resources in the world. Cars, airplanes, and all sorts of machinery are fueled by it. It is used to generate heat and mixed with chemical products to make plastic, detergents, DVDs, furniture, textiles, clothing, and even some medicines. Day-to-day life without oil would be nearly impossible.

The low price of oil in America is a simple matter of supply and demand. At present there is a glut of oil available, but not a huge demand. The U.S. is producing more oil than ever due to "in-house" methods like fracking. At the same time, Saudi Arabia and other OPEC countries continue to produce oil at high levels.

Meanwhile, the weakened state of many national economies around the world means that the overall global demand for oil is weak.

This feels good for Americans who are enjoying low prices, but low demand indicates a "fragile global economy," according to a recent NPR article. And since oil is very important to every country in the world, whenever oil prices shift there are bound to be political and economic ramifications.

Take Russia and Iran. Both the Russian and Iranian economies depend on the ability to export their oil at prices significantly higher than the current price of around $84 per barrel, according to The Economist. Many economists predict an economic slump if the price of oil continues to drop, which would cast a shadow on the lower prices at the pump.

The upside to this, in terms of Russia and Iran specifically, is that this economic pressure could encourage these countries back to the United Nations negotiation table, which would be good for global cooperation.

Do you think it is in America's best interest to continue developing our own energy resources? Share in the comments below!

Looking for Ways to be Patriotic? Here are 7 Ideas to Honor Soldiers on Memorial Day
/looking_for_ways_to_be_patriotic_here_are_7_ideas_to_honor_soldiers_on_memorial_day
Veteran Creates Booming Business, Gears Up for Big Memorial Day Sales
/veteran_creates_booming_business_gears_up_for_big_memorial_day_sales
Murder Suspect of Deadly Shooting Reveals His Intentions on Video
/murder_suspect_of_deadly_shooting_reveals_his_intentions_on_video
Musician Dies of Cancer, Fans Devastated
/musician_dies_of_cancer_fans_devastated
The Duggar Family Announces Another Life-Changing Event
/the_duggar_family_announces_another_life_changing_event
Bounce House Collapses on Kids, Injuring 2, But What Caused it is Horrifying, Unexpected
/bounce_house_collapses_on_kids_injuring_2_but_what_caused_it_is_horrifying_unexpected
Listeria Recall Alert: Over 5,000 Pounds of Frozen Entrees May Contain Deadly Bacteria
/listeria_recall_alert_over_5_000_pounds_of_frozen_entrees_may_contain_deadly_bacteria
Egypt Launches Massive Retaliation Strike After Christians Were Murdered
/egypt_launches_massive_retaliation_strike_after_christians_were_murdered
Franklin Graham Calls The Patriots' Latest Move "Sinful"
/franklin_graham_calls_the_patriots_latest_move_sinful
President Trump Issues Weekly Address After Busy Week Traveling The Globe
/president_trump_issues_weekly_address