When you can fill your tank for 40 percent less than what it cost last summer, it’s hard not to notice and even harder not to like it. As this is written (mid-December 2014), the price of a barrel of oil has fallen from about $110 in July to about $57, and the price is falling still.

What’s going on? Recent oil pricing graphs look like a roller coaster. There is a steep ramp up to the all-time high in 2008 of just under $150 a barrel, a wild drop to near $30, and then an almost five-year bouncing climb to this summer’s high, followed by the current drop—definitely not business as usual.

Realize first that oil prices are global, not local. And it’s a real price—the product of actual worldwide supply and demand—not a manipulated, subsidized, or otherwise controlled price. What’s been happening is quite simple: Demand for oil is down worldwide while supply is up. When supply exceeds demand, the price drops.

Demand is still strong in the US. Consumption here was highest in 2004–2006, at more than 20 million barrels per day (Mb/d). The current level is at about 19 Mb/d and holding steady. Worldwide, there is still demand growth in some countries, most notably China and India, but demand has fallen overall. In Italy—a country that has more than some interest to motorcyclists—oil consumption has fallen more than 30 percent from 2006 to 2014.

What about supply? In most of the world, supply has been pretty flat. The exception is the US shale oil boom, which has increased US production over 40 percent since 2009, from just over 5 Mb/d to a current level of around 9 Mb/d. That 4 Mb/d is not a huge addition in the world total of 75 Mb/d (crude oil), but it’s significant, especially now with demand down.

In the past, when demand and prices dropped, OPEC, the Organization of Petroleum Exporting Countries, might have reduced production to increase prices. This time the biggest OPEC player, Saudi Arabia, said no to production cuts, and the rest of OPEC basically followed the Saudi’s lead. There is plenty of speculation about the political and financial motives of the Saudi position, but the fact remains that producers worldwide must currently live (or die) with the situation of an oil price in the $50 range and falling.

The US production boom has been the result of hydraulic fracturing (fracking) and horizontal drilling to gain access to “tight” oil trapped in layers of shale rock. The technologies involved are expensive, with a single well typically costing around $8 million. The business made good sense when oil brought over $100 a barrel, but detailed analyses from the various tight oil plays show that the break-even price likely averages around $80 per barrel. A price of $57 and falling spells trouble.

The US tight-oil business is already showing signs of stress. In November, new drilling permit applications were already down 40 percent. That’s significant, as these wells deplete quickly, with production falling as much as 80 percent in as few as two years. New wells must constantly be drilled just to keep up with depletion. In this scenario, production could fall fast.

Falling US production might not drastically affect world supply, but drastic changes may be in store if failures in the energy sector snowball through the financial sector. The US economic recovery is anemic at best, and problems in a sector of the economy as large as this could lead to recession.

But the most compelling numbers I’ve seen have to do with employment. The oil boom states are Texas, North Dakota, Pennsylvania, Colorado, and West Virginia. From 2008 to 2014 these five states generated about 1.3 million new jobs. For the 45 remaining states, the count as of the end of 2014 was minus 400,000 jobs.

As far as the jobs recovery has gone, it’s all been in the five oil boom states. And the price of oil is definitely threatening the oil boom. Cheap gasoline equals failed energy companies equals employment crash? Let’s hope not. Cheap gasoline might be extremely expensive for us in the long run.

James Parker designed his first original motorcycle in 1971; his most recent design is the Mission R electric superbike. In between, he worked on multiple other motorcycle projects, including 30 years spent evolving the RADD front suspension system used on the Yamaha GTS1000 and various other prototypes.