Drivers across the country have plenty to be thankful for. The national average price of gasoline is expected to drop below $2 a gallon for the first time since 2009, all thanks to a global plummet in oil prices. But with oil dropping as low as $45.19 a barrel and the possibility it could drop even lower, there is plenty of disappointment for those who benefit from higher prices.
Here are some of the “Biggest Losers” in the ongoing oil bust:
- North Dakota, Alaska, Texas, Oklahoma and Louisiana: As prices fall, extraction is becoming less profitable in many of the states that led the production boom in the US. When the Brent benchmark dropped to around $51 dollars a barrel globally last week, US producers were taking in much less. The New York Times wrote “Because of a shortage of pipelines and the distance to major markets, North Dakota’s Bakken shale producers this month so far are selling their crude for as little as $34 a barrel.” Already, rigs are on the decline in these states that benefit from the industry. The International Business Times reported the number of working rigs fell by 3.3 percent, to 1,750 rigs, last Friday. The article also reports it has affected the United States Steel Corporation, which will lay off more than 750 workers at a plant in Lorain, Ohio and Houston, Texas because of the lower demand for steel used in pipes and tubes on rigs.
- Russia, Venezuela and OPEC: Both Russia and Venezuela saw major economic decline as the price of oil dropped. The Wall Street Journal reports that Venezuela needs oil prices to be at $117.50 to break even and Russia $98. The article posted break-even points for other countries as well, all of which were not met with the low price of oil when the article was published, with the exception of Norway.
- Tesla: Leading up to this week’s Detroit Auto Show, the electric car manufacturer watched its stock price drop along with the price of oil. While some believed it was just a coincidence, investors are losing confidence. Lower oil prices and the lower cost of gasoline means less consumer interest in electric cars. The US bank Morgan Stanley, which formerly believed in the company’s ambition, has lost faith. From an article in Business Insider: “Tesla’s ambitions rest on its ability to manufacture a battery at a competitive price, which seems difficult in the current environment, where oil is plumbing record lows with each passing week, Morgan Stanley said.”
Even with the drop, The Huffington Post points out oil prices are still historically high when adjusted for inflation and compared to recent decades. Still, consumers are happy with the extra cash they have from cheaper gas prices and big oil importers, like China and Japan, certainly welcome the drop. With the market still searching for a bottom in this most recent decline, the big question now across the globe is how long will it last.