What do Russia, recycling, and ISIS all have in common?

Since January, crude oil prices have dropped to as low as $31 a barrel, the lowest monthly average since December 2003, according to the U.S. Energy Information Administration. This has caused gasoline retail prices to drop to an average of $1.95 a gallon.

But why is this a big deal? How do lower oil prices affect everything from you to world politics?

For starters, oil holds massive power over the economies of many countries. For example, Russia is an oil-producing country. This means that a very large portion of its economy is focused around the extraction, production, and transportation of oil. According to the BBC, “Russia loses about $2bn [billion] in revenues for every dollar fall in the oil price.”

With a drop in the price of oil comes a drop in Russia’s economy. According to CNBC, Putin has admitted that low energy prices have led to “dangerous revenue losses.” This drop in economic activity may force Russia to work with other nations and will provide “an opportunity for the United States and European Union to get concessions from Russia on multiple geopolitical fronts.” If oil prices remain low, Russia could “be slowly destabilized.”

This destabilization has two possible outcomes, according to CNBC, either “Russia may reach out more to wealthier European countries like Germany,” or Russia “may try some desperate moves abroad, becoming more aggressive externally as it weakens internally.”

But these low prices don’t just affect large-scale economies. Another effect is that more economic pressure is being applied to the Islamic extremist group ISIS.

As of 2014, ISIS was making somewhere between $1 million and $2 million a day through selling oil, according to the business magazine Financial Times. The group is now making around $300,000 a day through oil sales. This has caused ISIS to “cut spending on fuel and bread subsidies, while increasingly shaking down locals for cash.”

However, this will not be enough for ISIS to collapse: “It will take a lot more than low oil prices to really damage the funding operations of ISIS,” according to CNBC.

However, ISIS’ oil sources are still a key target for the United States. Lan Bremmer, the president of the Eurasia Group, the world’s largest political risk consultancy, says, “Airstrikes against ISIS oil have made it a smaller part of ISIS’ revenues.”

In fact, low oil prices are affecting the Middle East as a whole. Suhail Bin Mohammed Al Mazrouei, the energy minister of the United Arab Emirates (UAE), says the country is trying to move away from its dependence on oil: “In the UAE we are diversifying the sources of energy…and also we are diversifying the sources of income. We are developing our economy, and year on year we are seeing that the non-oil economy’s contribution is growing.”

One of the most obvious effects of low oil prices is the effect it has on all of us as consumers. With people spending less per gallon at the pump, people have more money to spend on other goods, such as clothing and food.

Lower gas prices have also affected the cars being driven, according to Americanrecycler.com: “The auto industry had its best November in a decade. This growing consumer demand was led by pickup trucks, SUVs and high performance gas guzzlers.” Because gas costs less, people are more willing to buy cars with reduced miles per gallon.

This increase in spending is not likely to go away soon. According to the Wall Street Journal, people no longer think that low gas prices are merely temporary. Oil is unlikely to return to $80 a barrel before the end of the decade, according to the International Energy Agency.

However, with the recent drops in price, America is not experiencing the same economic benefits as it had in the past. According to the New York Times, “When oil prices rise, the economy suffers; when they fall, growth improves. But the decline of oil prices over the last two years has failed to deliver the usual economic benefits.”

In the past, lower oil prices were a cause for celebration: “The effect was akin to a tax cut for consumers who could fill their gas tanks for less money.” And because the money lost by low gas prices usually affected larger oil producers, not domestic ones, America benefited.

But that is not happening this time. According to the New York Times, “The losses from lower prices are larger and quicker than expected as energy companies cut back on investment and lay off workers, while the gains are smaller and slower to materialize.” Consumers are still benefiting at the pump, just not to the extent they were in the past.

Oil has large effects on local government as well. For example, New Mexico will also have a drop in revenue for the coming year due to oil price declines. At this time, the estimated drop is approximately $232 million, “down from $60 million from four months ago,” according to the Albuquerque Journal. This will translate to less money for schools and a variety of social services next year.

The drop in oil prices has even changed the amount of plastics being recycled. According to The Wall Street Journal, “Plastic is often derived from oil, and there used to be money in recycled scrap. Not anymore. The fall in oil prices has dragged down the price of virgin plastic, erasing the recyclers’ advantage.”

Oil holds massive power. Everyone is affected by the changing price of this commodity, from world powers to your average Joe looking to recycle a used milk carton. Oil has the potential to create war, force nations to work together, and to destroy economies. So next time you’re filling up at the pump, think about how much power this simple liquid holds within our world.