AMHERST, N.Y. (WIVB) – Drivers that pulled up to the gas pumps at the BJ’s Warehouse in Amherst, Friday afternoon, were celebrating—they were buying gas in the first ring Buffalo suburb for less than $2.00 a gallon.
For these BJ’s club members, paying the lowest gas prices in more than 8 years was like a pay raise, or a tax cut, or something else.
“It’s like winning the ‘Buffalo Lottery’”, said one driver joking, “That is about as good as we are going to get in Buffalo, right? Lottery–here’s my ticket.”
Landscaper Daymond Colbert was filling up the 26-gallon tank of his pickup truck, which Colbert said used to cost more than $100, when gas cost about $4.00 a gallon. On Friday, he filled the tank for a little more than $40.00.
“Thanks to BJ’s. They are treating their members right, and hopefully everybody else follows suit and lower the gas prices to help everybody else out.”
The cost of energy from fossil fuel has been tumbling steadily for the last three years: a shot-in-the-arm for Western New Yorkers, but for those in the gas and oil industry, it is more like a kick in the gut.
The lowest consumer prices in years at the pump has made less profitable to pump the natural gas and oil out of the ground. The effect on the “Oil Patch”, also called the “Energy Patch”—the drilling, exploration, and refining of fossil fuels—has been the loss of hundreds of thousands of jobs.
The Energy Patch is responsible for about one third of the U.S. economy, so a hit like that can be a big impact on the economy, according to Buffalo State Associate Professor of Economics and Finance, Ted Schmidt.
“I think there is a lot of fear out there that this could trigger another recession–a global recession.”
Prof. Schmidt said the signs point to lower prices to continue well into 2016, and possibly into 2017–bottoming out when the glut of oil has been used up.
“The world is awash in oil, and it is going to take quite a while for that oil–the inventories–to be used up, and get back to where we can get into a balance of supply and demand.”
Financial advisor Tony Ogorek, Founder and Cheif Investment Officer of Ogorek Wealth Management in Williamsville, said the oil and gas companies are not the only segment of the Energy Patch feeling the pain. There are the spinoff businesses.
“Accounting firms, law firms, banks that are lending them the money; junk bond funds, which a lot of people own, have heavy exposure to frackers, and they are going to start to see some problems sooner rather than later.”
Consumers in the Buffalo area can now fill up their cars for about a third of what it cost three years ago, people are driving more, and buying more cars, which helps the automobile industry. The cost of heating your home is also down—especially if you heat with natural gas.
But here is the flip side: The troubles in the Energy Patch have spread far and near from the oil fields of the Midwest—even into Western New York. National Fuel, with headquarters in Williamsville has had to cut back its drilling and exploration business, reporting losses of more than $180 million in the fourth quarter of 2015.