U.S. Officials Believe Falling Energy Prices Are, "Pretty Good For The U.S. Economy," While Others Take A Different View
WASHINGTON: Earlier this month, White House press secretary Josh Earnest, said "As a general matter, the impact of falling energy prices has been good for the U.S. economy... It certainly is good for middle class families that are being pinched, and when they go to the pump and they see that the prices at the pump are up to $1.00 cheaper than they were last year - that certainly means more money in the pockets of the middle class families. . . It's also a testament to the success that the U.S has had over the last several years, in part because of the policies put forward by this administration, to increase production of domestic oil and gas."
As the price of U.S. oil dropped below $50 a barrel for the first time since April 2009 and the Dow Jones Industrial average dropped more than 300 points, Earnest was hesitant to say whether the two were related. However, he did comment on whether or not the Obama administration monitors this, "We're always monitoring the impact that any sort of policy area would have on the economy. So it's certainly something that we're watching."
In the state of Wyoming, depending on various factors, the oil industry makes up about 30 percent of the state's revenue. Wyoming governor Matt Mead told Fox News that for every $5 drop in the price of oil, the state of Wyoming's tax revenue drops thirty-five million dollars. He believes that lower gas prices will benefit people and businesses in Wyoming in the short term, but if lower prices continue, "we'll see rigs start to lay down, and it's not just the direct revenue - its hotels, restaurants and all that goes with that," said Mead.
Spokesperson for the Western Energy Alliance, Kathleen Sgamma, says "There is a point at which the lower commodity price will put new wells out of business... OPEC is definitely trying to put the U.S. producer out of business and they are going to fail miserably."
Sgamma said which companies will be affected and when will vary greatly. "That depends on the efficiency of the producer, where they're placed within an area. Even within the Bakken, there are more productive fields than others." She states another factor is whether a well is on private land or on state or federal land, "because the regulatory environment is such that it makes it more expensive to develop on those federal or tribal lands."
Meanwhile, analysts say the American Oil Industry will survive and that major oil producers in the Middle East cannot allow prices to remain this low forever.