By: Dan Adamski, Managing Director, JLL
For the first time in years, filling up isn’t getting us down.
Diesel prices sitting below $3 are welcomed by consumers, especially as the holidays arrive. In June of this year, gas prices reached $3.68. Now, they’re as low as $2.73, according to AAA. The drop in gas costs hit quickly, and its impact on multiple industries varies.
The Situation: Oil Prices Fall Worldwide
For the first time in five years, the price of one barrel has dipped below $70, which is down from more than $100 per barrel in the last five months. Causes for the drop in costs include:
- Excess supply and little slow down in production
- Drop in overall demand, due to slower economic growth in China and lower levels of oil consumption in Europe
- Strict fuel standards (good news for the environment) and a sharper focus on energy efficient practices
The biggest cause, however, is supply. There are three million more barrels a day in the global market now than there was in 2011. Combined with a new focus on sustainability and weaker demand, it’s no wonder that prices have decreased.