If you wanted to go out today and buy one barrel of crude oil, it would cost you about $73. That translates to a gas price, at least in my neck of the woods, of around $2.50 per gallon. That’s a heck of a bargain considering what we’ve seen recently (not to mention when compared to European petrol prices).
So imagine what would happen to the price of gasoline if the price of oil fell all the way to $30. One-dollar gas wouldn’t be completely out of the question.
Luckily for consumers, oil is heading back toward the $30 mark, at least according to analysts at GroundReport.
Who knows whether or not the report is to be believed. That prediction is based off a fairly complicated formula derived from the price of natural gas. It’s scientific, hard to follow, and includes a unit of measurement called an MMBtu. The details are painfully boring to read, but the bottom-line number is what I find compelling.
The consequences of $30 oil would be far-reaching. Consumers would be thrilled beyond belief, free to finally swear off “staycations” forever. Suddenly small cars like the new Ford Fiesta and alternative energy cars like the Chevy Volt would become obsolete before they even hit the market. The only people buying hybrid cars would be hardcore environmentalists in Boulder, Colorado.
Those environmentalists would find their fight against oil dependency exponentially more difficult if Americans could shrug off shrinking polar caps in favor of 20-dollar fill-ups.
Federal and state governments would even benefit, as gas taxes could be increased to raise funds for needed transportation projects. Our own blogger jgoods has written in favor of increased gas taxes and has ideas about how the money should be spent:
First is the necessity for federal highway funding. The system has been short-changed for a long time, and the condition of the country’s roads, bridges, and tunnels is scandalous. The present 18.4-cents-per-gallon gas tax is inadequate to fund even present maintenance levels.
With $30 oil, there would be plenty of room for increased gas taxes, which I think consumers would happily pay for the privilege of driving their V8 Camaros and Yukons across the country’s newly refurbished roads.
Simple question: Would you like to see the price of oil drop to $30 a barrel, or would the cost to the environment be too high?