Prices at the pump have seen a dramatic drop across the world, and Washington State University professors agree that this price cut is not sustainable.

The recent decrease in gas prices is due to an increase in global supply in all different types of energy. 

North American oil companies are largely responsible for this price reduction by dramatically increasing supply, according to an article from the BBC. 

The same article said that the Organization of the Petroleum Exporting Countries (OPEC), the oil-producing cartel, usually responds to decreasing prices by limiting supply, which raises the price. However, when OPEC met in November, the 13 countries could not agree on price cuts, as dominant producing countries such as Saudi Arabia wanted to retain the current oil output. 

As a result, OPEC did not decrease supply, and with North American oil flooding the market, prices dropped.

The United States has seen an increase in oil and gas because of more prevalent technique of hydraulic fracturing or “fracking.” 

Fracking is the technique of drilling a well into porous rocks and pumping a fluid mixture of water, sand, and chemicals at very high pressures into them, said Steven Saunders, assistant professor for the Voiland School of Chemical Engineering and Bioengineering.

Fracking allows the extraction of significantly more oil than primary oil recovery, which is the conventional method since it reaches usually inaccessible oil reserves.

“Given the U.S.’s energy needs, fracking isn’t going anywhere anytime soon,” Saunders said.  “Our electrical systems and automotive infrastructures are based on fossil fuels- we will need fossil fuels for the near-term future.”

However, a downside of fracking and other enhanced oil recovery technologies is that it is double the price of conventional oil extraction. As a result, oil companies will have to slow down the expansion of their production until the price of an oil barrel becomes high enough to make it profitable again. 

Such low gas prices are not sustainable long-term, and it is likely they will increase in the future as countries and firms adjust their prices and cut back their supply, said Shannon Neibergs, extension economist and associate professor of the WSU School of Economic Sciences. 

“We need to start preparing for the longer term. Oil prices fluctuate, supply fluctuates.  We need to be exploring different sources of energy to prepare for when oil prices aren’t $2.10 like they are today. We need to be exploring all types of alternative energies including solar, wind, biorenewable and others,” Saunders said. “Here at WSU, there is a great deal of research ongoing investigating alternative fuel sources.”

Research groups from different areas on WSU’s campus are currently working to develop new fuel cell technology, methods of transforming biomass and bio-waste into liquid fuels, and materials necessary for more efficient solar cells and batteries, Saunders said.

“It is an exciting time to be at WSU because of the level of energy research happening here,” he said.    

The economy functions as a balance board and needs to stabilize the plummeting gas prices, Neibergs said. Thus, some have said that there could be another gas tax added to rebalance the price and limit such extreme fluctuation.

However, when the supply and demand rebalances there will still be a gas tax in addition to a higher price, he said. 

While gas prices are so low, consumers will spend more money and thus boost the economy. 

Overall, the economy is continuing to get stronger. Labor markets are getting tighter, meaning there are more employees, and employers are having to pay more for their employees.

This is a great sign for the economy, Neibergs said.