Since the Sept. 16 stock market crash (now referred to as the "Panic of 2008"), the cost of oil per barrel and gas prices at the pump have fallen, which may seem inexplicable to some consumers. Many question how the economy can be doing so poorly if drivers across the US are benefiting from low gas prices.

"As soon as it was clear that the US problem with housing prices and mortgages was a global issue, and other countries were going into a recession right alongside us, that really decreased the price of oil," said Dr. Richard W. Evans, an assistant professor of economics.

The logical concern following this question would be whether US citizens may be reaping the benefits of a worldwide recession with one hand, while feeling the pain in other areas.

"The consumer expenditures are very weak right now, so a falling price of gasoline is going to cause consumers to spend more in other areas of the economy," said Dr. Clayne Pope, a professor of economic history.

Gasoline price, because of its predominance as an issue in media coverage over the past year, has generally been seen as the issue hurting consumers the most over the past several years. Thus, the current plunge in price could be looked at as an answer to prayer for many consumers. However, experts say this is only true if their car is the only thing they're spending money.

"If you're life is mostly based on gas prices, you should be excited," Evans said. "But if your life is more than oil and you care about whether your country is in recession, then you should be worried. Gasoline is only a small part of things we spend money on."

Should this knowledge cause worry for consumers who previously rejoiced about the gas pump price plunge?

"I love going to the pump and not wondering if I will have to sell a kidney on the Black Market," said Keri Frodsham, a 24-year-old speech pathology PhD student from Jacksonville, Ore.

On one hand, consumers and drivers alike can take comfort in the fact that the US is doing a little better in this global recession than most, Pope said.

"The dollar is stronger in the global market than it was six months ago, which is another reason oil prices are falling for us," Pope said.

But a benefit for the US dollar doesn't mean that there aren't many other undesirable side-effects of a global recession.

"Oil is traded not only as gas, but it's also traded as an asset or commodity," Evans said. "Just like stock prices, it can go down with the economy. Things like wages are going to go down also as a result, and that's a bad thing."



Copyright Brigham Young University 25 Nov 2008