Whether it appears as a top headline for every news outlet, or the signs next to gas stations everywhere, you probably noticed that gas prices have hit a downward spiral lately. And, boy, a gallon is really, really cheap. The Southeast region, which includes Louisiana, also features the Gulf of Mexico as a next-door neighbor. So Louisiana’s gas prices have traditionally been among the lowest on average compared to all other states.
But this is different. You could purchase a gallon of gasoline, aka a liquid with the capability of taking you 10-25 miles, for the same price as (or occasionally even less than) a single bottle of water. Now, why is this happening?
Over the past few years, the U.S. began to produce more and more of its oil domestically (and importing from Canada), therefore curbing its reliance on importing from international producers such as Saudi Arabia, Russia, and Iran. South American nations, particularly Mexico and Brazil, have the same story. This has come at an enormous cost to international countries that once thrived off exporting to nations such as America, but that’ve now lost that (and other) major piece of business.
So, demand reduced, and in order to keep prices at equilibrium, so should production. However, none of these countries are curbing their operations- they’ve decided that they’d rather take the hits of high production costs than lose market share. These international countries are essentially in a battle with each other-and because they’re all continuing to produce mass amounts, we now have an enormous oil surplus. Low demand + high supply= lower prices.
And as we’ll dive into soon, this phenomenon has a great amount of winners, and a great amount of losers.
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