Falling Gas Prices Could Hurt Oklahoma Economy

Gasoline prices have fallen below $2 a gallon in some parts of Oklahoma, and while it might be great for our family budgets, it's not necessarily what's best for the economy of an oil-producing state.

A barrel of oil at $65 is great for everyone pulling into a gas station, but, inevitably, it brings upheaval on the oil industry; from the little guy to multi-national corporations.

The price at the pump has been up and down for the past few years, mostly up, and this week it has hit a recent record low - below $2 in some parts of the state.

"We were aware of it on Thursday and Friday, so it made for an interesting holiday weekend," said WPX Senior Trader, Scott Milburn.

Milburn watches the price of gas for a living. The wall of his office is a constant indicator of changes happening in the market.

“Volatility has increased once OPEC announced it's not going to cut its production, so we've got a surplus of energy worldwide and, in particular, in the U.S.," Milburn said.

While consumers may be rejoicing, the oil industry is feeling the pain.

“There's a lot of big companies, some public some private, that are over leveraged. They went out and took on too much debt to do what they've done and, depending on how low prices go and how long they stay there, it could have a very bad effect on some public companies and some of the large private companies," said Trent Latshaw with Latshaw Drilling Co.

It could affect the economy, particularly here in Oklahoma - the nation's fifth largest producing state.

"The oil industry is so vitally important to our economy, our military, our national security, and the more that we can produce here at home and be independent, versus imported from other countries, I think over the long term would be better," Latshaw said. "It creates jobs, it gets circulated back into the economy and it strengthens our dollar."

Only time will tell what these ever-changing prices will mean in the long run.

"Energy always seems to go in cycles, and we're in a cycle that's a bust cycle if you will, so we'll just wait for the next boom cycle," Milburn said.

Even though it's too early to speculate how the current prices will affect the oil industry in the long run, it's a great thing for consumers and, hopefully, the less people spend at the pump, the more they'll put back into the economy another way.