This story was written by Gina Akers, The Daily Vidette
In the midst of a predicted recession and an ailing stock market, there is one thing for consumers to cheer about - declining gas prices.
"It's got to have some beneficial effects because people who must drive are spending less of their income on gasoline," Neil Skaggs, Illinois State University professor of economics, said. "That leaves more money to spend on something else."
On Thursday, prices dropped below $70 a barrel for the first time in 14 months. Last week, the OPEC cartel called an emergency meeting for this Friday to institute stability in oil prices that recently took a plunge after months of it being on the rise.
Prices have dropped by nearly $40 per barrel in just three weeks. It appears as though the demand for energy may decrease worldwide along with an unstable global market.
These reductions in oil prices are not only beneficial for drivers, but also people paying electric bills. This winter, energy bills will most likely be lower.
The fall in oil prices came after a government report showed domestic crude oil stockpiles rose more than expected, the New York Times reported. In part this is because Americans are driving less.
However, this does not necessarily mean that an increase in spending will force the prices up again.
"The fact that prices are coming down will benefit consumers, but not lead them to spending a lot more," Skaggs said. "The whole economy is really weak now because of the [country's] financial problems.
"I wouldn't be surprised if [gas prices] stayed at the current level or even slid lower. Gas prices usually go down in the winter anyway."
"We're closing in on winter so I think they'll slide a little more."
Although purchasers have reason to celebrate, the sharp decreases in oil prices are bad news for petroleum executives and oil producers, who say that in order to develop new sources for oil, they need more stability.
"News is never all bad or all good," Lane Crothers, politics and government professor, said. "Any of these oil producing countries are obviously going to be hurt by the reduction in oil prices."
Analysts say the OPEC cartel's producers, which control 40 percent of global output, may limit their output by approximately a million barrels a day to try to curtail the price drops. Countries need the prices to be a certain amount to balance their national budgets. Deutsch Bank estimates that Iran and Venezuela need them at $95 a barrel, Russia needs $70 and Saudi Arabia needs them at $55 a barrel.
The decline in prices is threatening Russia's ability to increase production. The nation is not part of OPEC.
"In some cases, in nations like Russia that are potential competitors, that may be very good for the United States. They will have less money to buy war equipment," Skaggs said. "On the other hand, there could be a host of problems if their economy crumbles."
Crothers said in most presidential elections, oil prices are a big issue, but that is not the case this year.
"The decline in oil prices had little influence in the recent campaign," Crothers said. "The bigger issue has been the broader economic meltdown. In this particular election with everything about the stock market, oil is a minor part of their concern, at least with the election."