Falling gas prices could take extended time to stabilize

Falling oil prices can translate into what amounts to a raise for you and your family as you pay less for a gallon of gas.

But the falling oil prices may not be good for the markets, your money or your retirement plan as we saw a barrel of crude oil drop below $50 Monday and the DOW tumbled 350 points.

"Having oil prices down for an extended period of time is going to hurt Houston in a number of different ways," said energy economist Ed Hirs. 

Ed Hirs is an energy economist at the University of Houston and is managing director of Hillhouse Resources, an independent exploration and production company.   

He says falling stock prices are not because of falling oil prices.

"Demand for crude oil did not keep pace with the growth and supply over the past year," Hirs said. "So inventories have built up. As I tell my class, when you filled up your gas tank with 15 gallons, the value of that 16th gallon goes to zero very quickly.   And we have a huge amount of inventory of crude oil."

On the "Today Show" Tuesday, CNBC's Jim Cramer said the lower oil prices are good for 90 percent of the country, but not Texas. 

"At $40, we start to see a lot of bankruptcies," Cramer said. "For some of the over-stretched oil companies in Texas and Oklahoma, that's where they start losing a lot of money."

Cramer predicted this downturn in the markets is a blip on the screen and things will improve within six months.

Hirs said to stay tuned.

"I can't predict what our stock market will do," he said.  "We're in an economic recovery." 

Hirs said he did not expect to see crude oil prices rise quickly this year unless OPEC cuts production or something major happens in the Middle East.