Oil prices begin to climb


A year ago, a gallon of gas costing $2.00 seemed nothing more than ludicrous. But in the last month, as a worldwide oversupply of oil has led to a huge drop in price, it’s become a reality.  Though gas prices have increased and continue changing significantly on a daily basis (the price went up twenty cents overnight,) they are still substantially lower than last years’ average at this time: nearly $3.50. Oil has nearly half the value now that it did last year.

Though great for consumers, the oversupply was not beneficial for oil suppliers, which, last month, sustained their highest losses in years.  According to NPR, such sliding prices could lead to deflation (a general decrease in the general price level of goods and services.)

Though it doesn’t sound particularly terrifying, economists consider deflation lethal, making it extremely difficult for business owners to repay loans, while competition forces them to sell products at a loss and continue to fall even deeper into debt.  With weak growth in Europe and China, global prices are at a higher risk for deflation.

“This price drop has been great for consumers, but now it looks like things are going to go back to the way we’re used to,” said Mr. Klokkenga, a social studies teacher at West.  Anthony Biddle (12) agreed that the price drop was certainly a good change for him. “I could fill up my car for just twenty bucks. You’d be hard-pressed to get anywhere near that deal last year.”

The trend seems to be coming to an end, however, as the surplus oil is beginning to lessen and the rates of oil production lower. People are getting used to paying a bit more for gas again. “It was cool for a while,” said Peyton Ort (12), “but I guess it was inevitable that things would return to normal.”