Why gas prices are so low right now

Key Takeaways

this winter there's good news for drivers gas prices are cheaper than they've been in years but it wasn't so long ago that people are complaining about high prices so what happened the first thing to know is that gasoline prices are largely driven by oil prices and those oil prices are set in a global market and largely determined by the supply and demand of oil the countries that produce the most oil right now are Saudi Arabia Russia and the United States Saudi Arabia is part of an organization called OPEC in the past OPEC has often tried to coordinate its production in order to try to get the price it prefers on the other side the biggest consumers of oil are the US China and Japan starting in the 2000s oil prices began Rising rapidly that was because China was growing fast and oil production wasn't keeping up this led to a huge spike in prices and a lot of talk about peak oil but those higher prices also made it profitable for the US and Canada to start going after harder to extract oil in Shale formations and tar Sands that led to a rise in Supply by 2014 that extra Supply combined with a Slowdown in demand in Europe and Asia all came together to create a price crash and that's better news for some than others in Russia and some OPEC countries low oil prices threaten their National budgets OPEC could try to cut production to prop up the price of oil but they haven't done that this time they're hoping that low prices will make some of the newest us producers unprofitable in the meantime American consumers are getting a big break if gas stays under 280 a gallon families could save $700 over a year by one estimate that would boost the economy in recent years the US has been using less and less oil because people are buying more fuel efficient cars but when gas prices go back down we do the reverse and start buying more gas guzzlers and SUVs so when buying a vehicle keep in mind that a car can last 10 years or more but if history is any guide low oil prices won't last that long