A new report from the energy policy think tank Resources for the Future has good news for Georgians: gas prices haven’t bottomed out yet, and Georgia’s economy is more poised than most to benefit from cheaper oil. The author’s model, based on oil futures, estimates that national gas prices will fall to $2.30 by January and average $2.45/gallon in the new year.
In eight states, the benefits of cheaper oil are outweighed by the negative impact on oil and gas extraction, refining, and petrochemical jobs. Georgia’s economy isn’t reliant on these sectors, though, so our state will instead see an overall economic gain from lower oil prices. In fact, after taking our economy’s composition into account, Georgia is estimated to have the 15th largest economic improvement due to lower oil prices.
Resources for the Future notes that the price decreases from oil’s dramatic fall will provide the average U.S. household the equivalent of an additional $2,790 a year in income. Once this increase is offset by the negative economic impact faced by the oil industry, the average household can still expect the equivalent of an additional $920 per year. Due to the uneven impact across states, this estimate is likely low for Georgians. Additionally, since low-income families spend larger amount of their income on energy, they will see a relatively higher percent increase in income.
Cheap oil isn’t entirely good news – the author notes that sustained lower oil prices will likely lead to more carbon emissions, and states that have seen major shale booms might be in for a rough patch. However, it seems clear that cheaper oil will benefit Georgia’s consumers and economy in 2015, and these sustained cheaper gas prices might be a topic of discussion in the next General Assembly session when determining how to properly fund Georgia’s infrastructure.