The public plays a vital role in affecting oil prices, as high demand spikes prices. The more oil rises, the more cost of living rises, which is why individuals must participate in lowering demand for their own budgets. The best way to keep prices from rising out of control is to conserve fossil fuel energy as much as possible.
How Consumers Cut Oil Prices
TheStreet.com reported in July 2018 “rising gas prices threaten consumers.” In early October of that year Reuters published an article about how oil prices had entered the “danger zone for consumers.” Price spikes were starting to look like the trends in 2007-2008 and 2010-2012. Later in October the International Energy Agency (IEA) warned that high oil prices were causing financial pain to consumers. Then oil prices plunged in November 2018, as an AP News headline proclaimed “oil plunge could help US consumers.”
After hitting a four year high near $86 in October, oil prices fell sharply in November to $55. Gas prices also dropped a quarter nationally to $2.60 per gallon. This decline was a response to the US, Russia and Saudi Arabia ramping up production due to less exports from Iran related to US sanctions. A slowdown in global growth and weaker demand played into the price plunge as well. Ironically, lower oil prices have contributed to slower economic growth.
Keeping Oil Prices Stable
When the price of oil is stable the overall market does well, since most businesses rely on oil. Cutting energy costs has become a common strategy to boost profit margins. In many ways consumers have no choice but to cut energy costs since budgets are getting tighter with the rising cost of living. Some homeowners have fought back against fossil fuels by investing in solar panels and electric vehicles. But these consumers are somewhat elite in the sense that they tend to be high income earners and early adopters of new technology. Much of the boom in solar energy the past decade has been at the utility rather than the residential level.
Learning To Conserve Energy
A key fact consumers should remember is that there is no real oil shortage, despite countless warnings from last century. Supply is very controlled, however, by oil companies and OPEC. People should be aware that society has the power to collectively lower oil prices by reducing demand. Energy conservation has become a way of life for many people who strive for sustainability and it’s becoming more common to hear and read about it.
Consumers can reduce dependency on oil and gas by driving less or participating more in public transportation. Rising interest in physical fitness has led to people developing a deeper appreciation for walking, jogging and bicycle riding. People who still drive frequently should consider investing in more fuel-efficient vehicles or carpooling.
Using the car less for joy rides and more for essential mobility is becoming more common, especially for younger people who cannot afford travel. Even though many of us were raised to believe a car is essential to everyday life, millennials do not typically share this view. Many of them have student debt and still live with their parents. Car dealerships are noticing declining customers from this age group the past decade. Millennials tend to have a cynical view of the oil industry and gravitate toward environmental concerns.
Oil demand is further lowered when consumers apply conservation to overall lifestyle patterns. Preparing meals at home rather than eating out is part of this paradigm, as well as spending more time with home entertainment and less time going to big shows and sporting events. Dressing cooler in the summer and warmer in the winter has been a strategy to cut home energy costs. Many homeowners invest in weatherizing their homes, which cuts energy bills even more. Turning off electricity when not in use is another strategy that has widely spread to the business world.
The fact that leading Dow components Apple and Walmart have been successful at cutting costs by using solar panels has created deep interest across all industries. Moving away from fossil fuels not only helps the environment and cuts energy costs, it gets good press. It demonstrates corporate social responsibility (CSR), which is becoming increasingly important to investors.
In the future energy will be much more decentralized than it is today, as there will be off-grid solar installations everywhere. That means people will not rely on the conventional grid as much as today. Ultimately, oil prices can only go so high now that it’s clear we are in an energy transition toward renewable energy sources. The opportunities of cost-cutting from alternative energy are too great to ignore for consumers and businesses. Everyone, however, must realize that oil prices can spike up at any time due to news events.