Gas prices at many stations across Oklahoma City are now below two dollars a gallon, according to AAA that's the lowest prices in five years. But those falling prices are starting to raise concerns.
AAA estimates U.S. drivers are saving more than $400 million dollars a day. And the less money we spend on gas, the more we have to spend on other things and that helps the economy. According to AAA, prices are down $1.25 from June.
“It's unheard of. I've never heard of prices drop so far, so fast,” said Chuck Mai, with AAA.
For the City of Oklahoma City, which has hundreds of vehicles, that can add up.
“If we annualized what we are saving right now it would probably save us a million dollars in the budget on a year,” said Craig Freeman, the Finance Director for the City of Oklahoma City.
However, as gas prices go down, so do the profits of oil companies. Sustained low prices could cause them to cut production. Economic experts predict the low gas prices could cost 1,000 Oklahomans their jobs. And the state Finance Department is currently calculating what all of this means for the state budget.
“All that oil that's produced here in this state or any state is taxed,” explained Mai. “Less oil being produced, less money to play with.”
The state has already started seeing the effects in November collections. But John Estus, the Director of Public Affairs for the Office of Management and Enterprise Services, says the state could likely weather low oil prices for six to eight months without any major effect.
But if low oil prices cause the energy sector to shrink, the Oklahoma Economy as a whole will likely feel the effects and that would mean problems for us all, including the city, which relies on sales taxes for revenue.
“When people are affected by jobs or lower pay, that has an effect on their ability to purchase and that effects our budget,” said Freeman.
On Thursday, the State Board of Equalization will meet to discuss the effect of lower oil prices on the current state budget and will likely have some in-depth prospects at that time.