To a significant degree, the recent drop in gasoline prices can be tied Saudi Arabia’s desire to screw over the Iranians (and the Russians) without having to resort to open military conflict. By refusing to go along with a cut in OPEC’s production of oil, the Saudis are contributing to a major loss of revenue for their adversaries.
Iran’s foreign policy is very expensive, and they will soon have to make difficult choices that may entail scaling back their regional commitments. Meanwhile, Bashar al-Assad’s main patron, Russia, has seen the value of the ruble plummet in recent weeks. Putin just had to abandon a planned pipeline through Bulgaria and Serbia that would have undercut Ukraine’s power and revenues.
Cheaper gas prices should work as a stimulus to the U.S. economy by freeing up money that consumers can spend in other areas. At least for now, the low prices should not cause a contraction in the domestic production market, so this is like a big middle class tax cut.
Of course, we’re just serfs observing the Big Boys playing the Great Mineral Extraction Game, and this is but one piece of a very complicated and troubling global picture. With the threat from Islamic State, Iran can no longer be considered as an unambiguous enemy. Lower gas prices encourage more gas usage. More energy independence is good, but it can also create dependence on the industry as well as producing more domestic political power for the energy industries.
But it can be plausibly argued that at least in this one narrow area, the policy is having some positive effects.
