Oil has quietly crashed. US crude closed Thursday at $56.99 a barrel, the lowest since the Covid-era collapse in early 2021 under President Joe Biden. Prices have fallen nearly 20% since last year. For consumers, it’s easy to cheer: gas under $3 a gallon in places like Michigan, Ohio, and Texas, and a national average of $3.05 for unleaded regular. Heating oil is cheaper, too, just in time for winter.
But this isn’t just good news. It’s also a flashing warning light for the broader economy, and especially for states like Alaska, Texas, and Louisiana, where oil jobs and production revenue still underpin everything from school funding to local government budgets.
What’s happening here is simple supply and demand, but the implications are anything but simple. The United States is pumping more oil than ever before, and OPEC nations haven’t made deep enough production cuts to offset it. Demand in Europe and Asia has cooled. A stronger dollar is compounding the slide. The result is a glut and a price drop sharper than many expected heading into winter.
For households, this translates to immediate relief. For the oil industry, it’s pain deferred but not avoided. If crude stays below $60 for long, we can expect smaller producers to pull back, rigs to shut down, and layoffs to ripple through communities that depend on energy jobs. Alaska has seen this movie before.
Politically, the decline in fuel prices is a win for Donald Trump, who campaigned on restoring affordable energy and American dominance in oil production. On that point, he can point to the scoreboard: Prices are down, just as he promised.
But the story behind that number is complicated: It’s a combination of oversupply, softening demand, and geopolitical uncertainty.
Cheaper gas feels like a blessing in the moment, but it may signals something deeper, such as a cooling economy, falling demand for goods, and pressure building in the energy sector. The price at the pump is a snapshot, not a forecast.
If oil continues to slide, it could be the start of a new cycle that tests the resiliency of America’s oil states all over again.
Suzanne Downing is a longtime journalist and political analyst who lives in Alaska.
7 thoughts on “Downing: Oil price plunge is a warning, not just a gift at the pump”
Its why Living below what one earns is wise. It’s why Americans shouldn’t be government dependent. Regardless of someone’s government dependency level, you should still live under your monthly earnings and keep a rainy day savings for six months to 12 months.
Going into a glut of oil, this would seem like an ideal time for the nations of Europe to finally show some moral clarity and stop buying Russian oil, to stop financing Putin’s war machine. (I’m sorry; putting “Europe” and “moral clarity” in the same sentence; fat chance!)
That’s the problem with being a 1-trick pony.🤨
This is what “Drill, Baby, Drill” will get you. Supply and demand always wins, folks. Better talk to Trump about his pro-oil energy policy.
Beats the HELL out of funding Joe Biden’s sidekick Maduro madness in Venezuela.
Every move on the chess board produces consequences.
It all just depends on what and how the man in charge wants to spend our money on and how much of a kickback Hunter gets as a reward to support his expensive habits.
You act like low prices are a bad thing. As a consumer, or a producer, free markets are all about high quality and low prices. That’s the goal. Alaska will just have to up the volume of oil and gas production or diversify to generate revenue. Mining, timber, agriculture, and manufacturing all become more viable and sources of revenue once costs and accessibility are handled. Won’t be the gusher oil was but once developed it will be sustainable
This is bringing back memories from the mid 1980’s when the price of oil collapsed. I recall Mercedes contemplating a new model- no seat and no steering wheel-for the Texas Oil Man who lost his butt and didn’t know which way to turn.