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Good news: The price of oil just hit a historic low
Oil prices tumbled throughout 2015, much to the delight of folks across the country, and according to Bloomberg the price of oil just passed another major milestone.
On Jan. 13, oil dropped to less than $30 a barrel, hitting its lowest price since December 2003. In fact, some models had prices reaching as low as $20 a barrel. This has industry leaders and countries worldwide making changes as they adapt to the unprecedented prices.
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Why oil is so cheap
There were a number of complicated trends that initially helped lower the price of oil worldwide, and now it seems that the already low price is leading to an even bigger drop.
Bloomberg reported that since 2014, the price of oil has dipped as much as 70 percent, and because of the steep decline banks and oil companies are now looking to sell shares and roll back operations, which is driving prices even lower.
It can be difficult to pinpoint exactly why oil dropped off so much in the first place. The New York Times reported that it likely has less to do with shrinking demand and more to do with an over-abundance of supply.
The proliferation of renewable energy has yet to really offset the world's massive thirst for oil. Instead, lagging European economies and more efficient cars and buildings are making a minor impact on global demand, the Times reported.
The U.S., meanwhile, has increased its oil exports big time in the last few years, driving competition around the world. Countries like Saudi Arabia and other members of OPEC have not let up on production rates, and as a result, there is a huge supply of oil serving a slightly smaller global market. There are complicated political and economic forces driving these trends, but the result is unchanged: Oil prices are plummeting.
According to the U.S. Energy Information Administration, the average price of a gallon of gasoline is now less than $2.00 in the U.S. In some areas that price is even lower.
This is incredibly helpful for anyone who does a lot of driving. In fact, AAA reported that U.S. drivers saved as much as $115 billion dollars in gas costs in 2015 compared to the previous year. That averages out to nearly $550 per driver. Airlines are also feeling the effects, as lower prices have made flying more affordable as well.
For families that live in cold climates, lower oil prices are very beneficial because home heating bills are often a major setback for family budgets. The cost of food, consumer goods and even inflation may also be lowered by this prolonged drop in oil prices. For however long the trend persists, the low price of oil is good news for everyday consumers and families across the country.
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