PITTSBURG — Jim Bartelli probably echoes the sentiment of many Crawford County motorists when he says the big drop in gasoline prices has been a blessing.
Bartelli, of Girard, was at Dillon's on North Broadway in Pittsburg Thursday afternoon filling up his SUV.
"I think these prices are fantastic," he said as he pumped gasoline with a price of $1.61 a gallon for regular unleaded. "Now I'm able to fill up for in the $20 range. Just months ago it was probably costing twice that."
While much of his driving is done locally, Bartelli said he travels to other states too and should be able to really tell the difference when out on the highway.
But for other people, the plunge means a loss in profit, the cutback in jobs and less investment in future exploration. This week the price of a barrel of oil hit the lowest levels in more than 12 years in the $30 a barrel range, according to Associated Press reports.
Jim Cornish, president of the Eastern Kansas Oil and Gas Association, said on Thursday, that a couple of years ago he never thought he would ever see oil prices drop as much as they have. As the owner of Cornish Wireline Services based in Chanute, he has seen the entire Kansas energy business suffer.
"New hole drilling (for oil) is not at a standstill but is really suffering," Cornish said. In recent years Kansas regulators have seen on average between 400 and 600 applications for intent to drill new holes each month.
"In December there were only 87 intents filed in the entire state," Cornish said. He said the force driving down oil prices and the price at the gasoline pump is based in the Mideast.
"The Saudis and OPEC are intent on destroying the fracking industry in the U.S.," Cornish said. "They're protecting their own interest."
He said for Mideast producers their longterm best interest is to see fracking in the U.S. go away. Because of the drop in oil prices from the $80-a-barrel range to $30 a barrel, Cornish said U.S. producers are losing 70 percent to 80 percent of their revenue stream.
His own business and other regional firms are also suffering, he said.
"What happens in the future is really dependent on what OPEC does," Cornish said. Globally about 92-to-93 million barrels of oil are consumed daily, he said.
"If OPEC continues on their path it would not take a lot to really impact world markets," he said.
Professor Michael Davidsson, with Pittsburg State University, said the only downside he sees for the U.S. economy as a whole is for oil producing states.
"But nationwide consumers are benefitting," said Davidsson, who teaches economics at Pitt State. "We've seen a 17 percent drop in the price of oil since the beginning of the year."
Davidsson said each 1-cent drop in the price of gasoline at the pump equates to about $1 billion extra in the pockets of U.S. consumers.
"Over the past two years that means consumers have an extra $150 billion to spend," he said. That has had a huge impact on the economy for everything from shipping produce to the price of durable goods and products made from petrochemicals like plastics.
"Worldwide about 71 percent of oil consumed is used for transportation," Davidsson said. "Here in the U.S. only about 56 percent is used for transportation with the rest being used in the petrochemical industry."
He agrees with Cornish that Mideast OPEC producers are driving the decline.
"They want our fracking industry to go away," Davidsson said. With the lower prices less exploration and drilling in the U.S. is going on that translates to less supply for the future — which should drive oil prices back up, he said.
For the future of the U.S. industry, Davidsson said the impact really depends upon how badly the Saudis want to break the U.S. oil industry and fracking.
Davidsson said he would not be surprised to see the price of a barrel of oil drop to $20. And, if OPEC producers want to really push the U.S. fracking industry to the brink, they would probably allow prices to get as low as $13 a barrel.
— Mike Elswick is a staff writer for The Morning Sun. He can be emailed at firstname.lastname@example.org or follow him on Twitter @ mike_elswick.