Remember when gas was approaching $4 a gallon? What did you do? Fifty to sixty dollars to fill up. More if you had a truck or SUV.

Most of us curtailed our driving, consolidated trips, cut back on other expenses to accommodate a commodity we had to have.

Now gas is below $2. Why were we paying so much before and so little now? What’s going on?

Some Oil History

Between 2010 and 2014 demand for oil increased dramatically. The recession and financial crisis was slowing and countries began recovering but world production was having a hard time catching up.

Add unrest in Libya and Iraq to the equation and supply starts contracting. Countries started drawing down their reserves and prices reached over $100 a barrel.

High prices made it worthwhile to go after oil that was financially out of reach previously. Hydraulic Fracturing and horizontal drilling techniques were now able to reach vast quantities of oil and still make a profit for the companies.

As a result crude oil production in the US has almost doubled since 2010. At long last the US was headed for oil independence.

Saudi Arabia kept pumping to retain its market share. Then Libya settled down and started pumping and now Iran is going to add to the supply since their sanctions have been lifted.

The result — the increase in supply has caught up and surpassed demand. When that happened prices naturally plummeted.

Here’s The Danger

High gas prices are almost as dangerous to the public as low ones. When prices are high people top off their tanks in fear of the price going up. What’s the result in doing that — you are paying to store the gas in your tank that the oil companies should be storing for you in their tanks.

When prices are low it’s like getting a raise in pay. Suddenly there are a few more bucks in your pocket. You can spend a little more at the grocery store.

Buy an extra pizza a month. Things delivered by truck, which is everything, now costs less.

You are lulled into a false sense of security. Now you can afford those extra trips that you put off before.

You spend that extra instead of saving it or using it to retire debt.

Oil won’t stay low forever. But if we’ve learned one lesson over the past few years when it does go up it goes up much faster than when it comes down.

Some Final Thoughts

It’s nice to hear that gas pump click off and the finally tally is about $30 less than it used to be. You’re not nearly as depressed climbing back in your car.

You might even whistle a happy tune on the way to work or home. It’s amazing how a few spinning numbers can affect us both positively and negatively depending on how much spinning they do.

But will you continue to embrace those same money saving behaviors while gas is low? Or will you just relish the good times while they last and drive like the tank is always full?

How will your spend your raise in pay? Enjoy it while you can.

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