Stephen F. Austin State University

Bad news about the domestic and global economy continue to stream across news pages everywhere, but there has been a silver lining of sorts for consumers as oil and gas prices continue to tumble.

On Monday, the price of a barrel of oil dipped below $50, settling at $49.28 per barrel, a 22-month low. All this took place as it was officially announced the country has been in recession since December 2007 along with OPEC's decision not to cut production at a meeting in Cairo on Saturday.

Here in Palestine, the cheapest gas in town has been hovering around or below $1.80 per gallon. In nearby Jacksonville gas is selling for less than $1.70 per gallon at some stations.

“(Lower gas prices) frees up extra money in consumers pockets,” said Dr. Clifton Jones, chair of the Economics and Finance Department at Stephen F. Austin State University in Nacogdoches. “It's almost like getting a pay raise.”

For Ann Brown of Palestine, who owns a business that operates a fleet of dump trucks, lower fuel prices are a welcome relief.

“I love that the prices are going down,” Brown said. “We have five dump trucks that get 5 miles to the gallon. When diesel was selling for more than $4.50 a gallon it was hard to make ends meet, to see prices where they are now makes a big difference - especially with today's economy.”

The benefits of having extra money going into the Christmas season are a big boost not only to local business people, but to local families and retailers.

“These lower prices are definitely the lone bright spot in our economy right now,” Jones admitted. “People have extra money to go out and spend on Christmas, or just to pay bills.”

Since this summer, gasoline prices have been more than cut in half, coming down more than $2. In July, the price of a barrel of oil hit a record at $147, and since then analysts have found that the current lower fuel prices have acted as a four percent pay increase for American consumers.

One Palestine resident is happy to see gas prices get back to a manageable range.

“I'm thankful they are lower,” Jim Pendland said while filling up his pickup truck. “It's ironic we are excited about $1.67 gas. They have us trained to appreciate gas at $1.67.”

For the foreseeable future, consumers can expect gas prices to continue their descent, according to Sarah Ladislaw with the Center for Strategic & International Studies.

“Demand may stay weak for another year,” Ladislaw said in a National Public Radio interview.

Though demand may look weak for the short-term; it looks quite different over the long haul and people need to be aware of the long-term trend.

“Over the long term the world will be moving from about 6 billion to 9 billion people,” which will drive up demand, Ladislaw said. “(Higher demand) in places like China, like the Middle East, like India and these rapidly emerging, developing countries is going to persist.

“People largely believe oil demand is going to come back on line, and that higher prices are sort of the underlying trend here,” she added.

While prices may be lower for now, the demand for gasoline is not rising significantly, according to Tracy McMeans with Sumrall Distributing in Palestine, who said, “people just aren't buying right now, even with the lower prices.”

A lot of that can be attributed to a change in behavior, Jones said.

“When gas first started running up a lot of people were somewhat surprised demand didn't fall off,” Jones said, noting prices shot up so fast most consumers did not have time to immediately respond to the situation.

As gasoline prices rose toward $4, though, Jones said, “people became hard-pressed to adjust.”

Jones noted a fundamental change in people's behavior as families cut out some of their hobbies like ATVs and boating - sales for both items have slumped - and people started buying more fuel-efficient vehicles and driving less.

And now that those lifestyle changes have been made, Jones pointed out that people are not going to just immediately jump back to their old ways now that prices are lower.

Such cautious behavior could serve people well, Ladislaw said.

“History suggests when prices are low people forget things such as energy security,” Ladislaw said. “I think people are more aware now of these long-term trends, that energy prices will probably be high again.

“Now is the time - even though there is less market incentive - to do things like conserve and become more fuel efficient and to promote alternative energies to change our path going forward. “We can't forego difficult decisions even though prices have dropped.”

When it comes to how low prices will go, one oil analyst, Philip Verleger, said oil could possible go as low $20 per barrel, but Ladislaw said much depends on the economy.

“We still don't know how bad the economic downturn will be,” Ladislaw said. “(We could) see price pressure drop from that.”