In this week’s 3Qs with news@Northeastern, D’Amore-McKim professor of finance Jeffery Born explains why falling gas prices might be good for your wallet but bad for the economy.
A gallon of gas hit a seven-year low on Monday, according to the AAA. And the World Bank recently issued a report suggesting another 27 percent decline in 2016 will follow the 47 percent drop seen in 2015.
“During the natural gas ‘fracking’ boom, the economies of the northern plains boomed due to drilling and energy production activities. Unemployment was very low and state governments enjoyed very healthy increases in taxes,” notes Born. “These same states started feeling the pinch of falling oil prices and drilling activity declines more than six months ago, causing many to begin cutting their budgets and dipping into rainy-day funds.”