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Oil prices drop below $75 for first time in four years amid supply glut

High Oil Prices Continue To Drive Gas Prices Steadily UpwardsHigh Oil Prices Continue To Drive Gas Prices Steadily Upwards

Oil prices dropped below $75 Thursday, hitting their lowest levels in four years as higher production creates an excess of supply.

The price of West Texas Intermediate crude oil dropped by $2.85 to $74.33, and has fallen more than 30% since June, when prices were above $107. Meanwhile, Brent crude oil dropped $2.46 on Thursday, to $77.92, for a similar 30% drop in the past five months for the global benchmark.

A major driving force behind the declining prices is U.S. oil production, which has increased to nearly 9 million barrels per day and is expected to average 9.4 million barrels per day in 2015. That would be the highest production levels since 1972, according to the U.S. Energy Information Administration. The increase in production comes as a result of the shale boom in states like North Dakota, Ohio and Pennsylvania.

Struggling economies in Asia and Europe have also contributed to global oversupply, while the decision by Saudi Arabia — the world’s largest oil producer — to cut its prices this month applied pressure to other global suppliers. Oil prices are also being driven down by the rising value of the U.S. dollar, which hit a five-year high last week.

The drop in oil costs continues to hurt energy companies on Wall Street, where shares of Chevron (CVX) dropped about 1% on Thursday while Exxon Mobil (CVX) slipped 0.8%. Oil and gas driller Helmerich & Payne (HP) saw its shares drop steeply, almost 7%.

Meanwhile, lower oil prices could be forcing some energy companies to consider consolidation. Reports surfaced on Thursday of a potentially major oil field services deal involving Halliburton (HAL) and Baker Hughes (BHI). Both companies saw their shares rise on the speculation.

Of course, there is at least one positive effect of plummeting oil prices for American consumers who are seeing some of the lowest gas prices in years. Prices at the pump are averaging around $2.92 per gallon after recently falling below $3 for the first time since 2010.