Could Gas Fall Below $1 A Gallon?

COLUMBUS, Ohio (AP) -- Oil prices hit four-year lows Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.

The worst jobs data in 34 years on Friday just added more fuel to the deepening global recession as U.S. employers slashed a far worse-than-expected 533,000 jobs in November and the unemployment rate rose to a 15-year high of 6.7 percent.

A gallon of gasoline can be had for 50 cents less than it cost just last month, and people are starting to talk about $1 gas.

Granted, gas prices are a long way off from that magic number last seen in March 1999 when prices were at 97 cents a gallon, according to motor club AAA. Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express.

But consider what has happened since July 11 when a barrel of oil hit a record $147.27 and a gallon of gas was $4.117 on July 17. In less than five months, oil has fallen 72 percent.

Just this week, in which the National Bureau of Economic Research determined that the U.S. is in recession, oil has fallen 25 percent.

On Friday, light, sweet crude for January delivery settled at $40.81 a barrel on the New York Mercantile Exchange, down by nearly $3 per barrel. Prices fell as low at $40.50, levels last seen in December 2004.

Gasoline futures for January delivery tumbled to 90 cents.

For gas prices to get close to a $1, oil prices probably would need to fall another $10 a barrel - something that would have impossible to fathom during first part of this year as oil prices soared near $150 per barrel.

"Just seeing that '1' up there is just hard to imagine," said Kevin Keating, 65, an attorney as he filled up his Volvo S60 at a station in Phoenix that advertised prices at $1.67. "Wasn't that long ago that we worried about the '4' being up there."

Prices in New York City are well above the national averages, but still well off their highs of nearly $5 this summer.

"When gas prices are OK, we make a little profit," said Mamady Kourouma, 36, a cab driver from Guinea who paid $2.41 a gallon at a station in Chelsea.

With wages stagnant, home prices plummeting and foreclosure rated soaring, dollar-a-gallon gas may help mom fill up in the family minivan and cab drivers in New York City, but prices that low also would truly speak to how rotten the economy has become.

"The economy at that point worldwide would be in a serious, serious deterioration," said Geoff Sundstrom, spokesman for AAA.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said Thursday on his blog that retail prices could fetch $1.25 a gallon soon in parts of the Midwest, including Ohio, Indiana, Illinois and Missouri.

Already, some parts of the country are seeing prices around that level. The Web site, where motorists can post local gas prices, motorists can fill up for $1.29 in Neelyville, Mo., a village of about 500 people near the Arkansas state line.

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  • by Anonymous on Dec 6, 2008 at 06:20 PM
    Santa? Do not need him, need someone real. Falling gas prices will go up again. This is just a faux fix until the real changes occur.
  • by Blog Refuter Location: NC on Dec 6, 2008 at 11:37 AM
    What a coincidence...Lower gas prices when Bush first entered office and lower gas prices once Bush is preparing to leave office; strong economy with a huge budget surplus when Bush first entered and pitiful economy with a huge budget deficit once Bush is preparing to leave. I'm not saying that it is Bush's fault. I'm just stating facts. It just seems so ironic. Some presidents just have a better fate than others. This is what Qoheleth (writer of the Book of Ecclesiastes) would refer to as vanity of vanities because God bestows favor on whomever he wishes. Desperate times call for desperate measures.
  • by norma Location: greenville,north carolina on Dec 6, 2008 at 07:21 AM
    Im a concern citizen, I notice our global changes from high gas prices affected our lives in living, spending, eating, and no savings. would love to see the gas price at $1 to improve our global changes in our living lives ecspecially in children's sake. would love to see the children eyes with tears of joy and yell I believe there is santa after all. that breaks my heart in half.
  • by Walter Location: Jacksonville on Dec 5, 2008 at 08:01 PM
    Now will all the other prices for food, energy, and etc follow suit.

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