Are gas prices too low?

Monday, November 10th 2008, 7:15 pm
By: News 9

By Alex Cameron, NEWS 9

Oklahoma motorists are happy right now that we have some of the cheapest gasoline in the country.

The statewide average is now below $2 a gallon. Some are asking the question, "Are low gas prices, ultimately, what we really want here in Oklahoma?" The answers vary, depending on who you talk to, but the debate is not just academic. Oil and gas prices have a real bearing on the economy.

Motorists whose cars prefer premium can now afford it. Some, however, wonder if it really is a deal.

But Oklahoma City University economist Steve Agee said the low prices are beginning to take a toll on the oil and gas industry, which brings money into the state in a variety of ways -- direct employment, contract work, royalty payments and taxes.

"You're going to see incomes falling, royalty incomes falling, and state tax receipts falling as a result of these lower prices," Agee said.

Crude oil has plummeted from a high of about $140 this summer to $62 dollars Monday. Oklahoma City Mayor Mick Cornett said, for the health of the local economy, it would be nice to see crude head back up a little.

"I think you'd want energy prices to be at $80 or $85 a barrel so your energy companies continue to hire people, they continue to explore for more energy and they don't slow down their philanthropic giving," Cornett said.

Some economists said a happy medium would be crude selling at $70 to $80 a barrel, high enough to keep oil and gas business in the black, but low enough to keep gas prices in the $2.50 range.