The Wall Street Journal reported:
Lower prices at the pump, down about 60 cents a gallon from a year ago, will have the equivalent effect of cutting taxes in the U.S. by between $100 billion and $125 billion,Goldman Sachs economists said Wednesday. Americans spent $370 billion on gasoline last year.
So for every penny the cost of gasoline falls, American consumers save about $2 billion (a rough projection from the Goldman Sachs calculation). That's a lot of money.
The best way to lower oil prices is to lower consumption. So reducing oil consumption should be a core economic development objective of every local and state government (that isn't a massive oil producer).
We tend not to put reducing oil consumption into the economic development box. Economic development in practice usually means chasing after larger companies that are setting up a bidding war of tax breaks among different cities or states. That's a pretty dumb way to do economic development. Much better to come up with a universal strategy for reducing costs for all residents and businesses (like lowering energy costs) and spend time, energy and staff resources on advancing that strategy.
We could use more economic research on the impact of lowering oil prices. For example, if one state reduces oil consumption by a million barrels of year, what sort of impact on the global price of crude oil can be reasonably expect? If we can figure that out, at least ballpark, we can more easily justify the investment in reducing that oil consumption, because we can see the economic return in the form of lower prices for all.
The California High Speed Rail project expects to save 12.7 million barrels of oil every year (since it runs on electricity, not oil). What's the impact of saving all that imported oil? We need more research!