BEAUMONT, Texas — Oil prices have plummeted to a nearly 30 year low. 

Monday was the largest single day drop since Desert Storm in 1991. This has been weeks in the making, however, as the Coronavirus has limited trade and production. 

The Dow Jones Industrial Average plummeted 15-hundred points this morning. This six-percent drop follows similar drops in Europe, after a fight among major crude oil producing countries.

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Dr. John McCollough is an associate professor of economics and finance at Lamar University. He says the Coronavirus is impacting oil prices in a couple of ways. 

First of all, McCollough says energy prices are decreasing because the amount of economic activity in China, one of the world's largest importer of oil, is scaling back tremendously. The virus is also now hitting other countries in Europe, landing them in similar situations. 

"For example, the northern half of Italy, their restricting travel throughout that region as well," McCollough said. 

Dr. Mccollough says now is usually the time of year when oil prices start to go back up, because travel starts to increase. However, because of Coronavirus there are travel restrictions and warnings to some countries, and major conferences and events have been canceled. That means less people are traveling, which means energy consumption is decreasing. 

"People are cutting back on airline flights, not taking their vacations, maybe cutting back on their cruise vacations, well, all of that is decreasing the demand for energy and oil." McCollough explained. 

He says OPEC tried to strike a deal to slow production, but that didn't happen. This caused Saudi Arabia to cut its export oil prices. 

"Right now it's currently trading at just slightly lower than 31 dollars a barrel, where as at the beginning of the year I think it was trading at you know in the upper 50's for a barrel of oil," McCollough said. 

According to AAA, the current average for gas prices in Beaumont and Port Arthur is $2.08 cents. That's down five cents from last week, and 12 cents from this time last year. 

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Prices dropped 25% over the weekend, which in turn impacted the stock market. McCollough says it's now impacting other industries as well, like bank stocks, for example. 

"Some of the banks stocks are getting hit because they're predicting that maybe some of these oil companies in Texas might not be able to fulfill their loan agreements with the banks, and might have to default down the road," McCollough said. 

McCollough says if this continues you could see America go into a true recession by fall. He says if a couple of months down the road the energy prices don't bounce back up, some energy firms will have to scale back production, which means layoffs. This could potentially have big impacts in Texas. 

"Energy firms will cut back on production, cut back on drilling and on exploration and they won't need as many workers and that's going to impact the Texas economy," McCollough said. 

The good news? 

Dr. McCollough believes this is only a temporary situation, and won't come to that. 

"From what I understand they're already testing a new vaccine for this virus and so hopefully maybe by the end of the summer, this will all be under control," he said.