Since June, global oil prices have fallen an incredible 40%.
Much of this can be attributed to the U.S. oil industry, which has ramped up crude oil production since 2008 and poured an extra four million barrels into the global oil supply, Bloomberg reported in a December 3 article. In addition, OPEC has largely decided to not cut production, meaning the world now has much more oil on hand than it actually needs.
Another reason for this decline in global demand is the worldwide push toward cleaner, greener energy. According toBloomberg, green energy will receive nearly 60% of the predicted $5 trillion that will be invested in building new power plants throughout the next 10 years. Major economic powers like the U.S., China and the European Union are all pushing for more austere restrictions on greenhouse gases to help stimulate the shift toward renewable energy sources like solar and wind power.
But while lower oil prices could spell trouble for oil companies and countries whose economies largely depend upon oil drilling, it’s good news for homeowners when the price of oil and natural gas determines how much they’ll pay to heat their homes this winter. That’s because heating and cooling make up more than 50% of the average home’s energy costs.
In fact, the New Yorker reports that these falling prices could put $75 billion dollars back into Americans’ wallets and even add 0.4 points to the U.S. GDP in 2015. This seemingly small GDP growth would be the first time the U.S. economy has grown by more than 3% since 2005.
All these facts don’t even take into account the fact that gas prices will be cheaper, as well. For the average American, the fall in crude oil prices around the world is something to be very happy about.
It’s great news for the environment, as well — with energy developers headed toward the $250 billion mark for this year’s spending on wind, solar, geothermal power and more, the increasingly rapid adoption of green energy should help slow down climate change and reduce the amount of pollution entering ecosystems everywhere.