Low gas prices could hurt AL economy and education budget
MONTGOMERY, AL (WSFA) - Gas prices are on a steady decline, which is great news for consumers. But according to some economists, that drop is reason to be worried.
Kevian Deravi, an economics professor who does some economic forecasting work for the state of Alabama, says the low oil prices, coupled with a shrinking international market, is hurting the economy.
Over the last few weeks, the stock market has taken a beating, although it did rebound some on Thursday.
Deravi says there is cause for concern as low oil prices have caused the energy market to collapse. That, coupled with China's economy retracting and Europe stuck in neutral, ,means US businesses are having trouble selling abroad.
The chances for a new recession are the highest they have been for five years, Deravi warns.
The impact of a poor economy would stretch beyond the private sector. It would also likely hurt Alabama's education budget, which is made up of mostly growth taxes. That means the budget's revenue rises and falls with the economy.
Recently the economy has been on the rise, meaning education has had an uptick in revenue. But if the economy were to falter again, the available funding for education may shrink, even if business is going well domestically.
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