Retail gasoline prices tumbled Friday to the lowest level in nearly five years. And while crude futures rose, analysts believed it was a temporary pause in an extended, downward arc as the recession spreads.
“We’re paying about a billion dollars per day less than we were in July” for gasoline, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. “We could probably bail out some banks and maybe even some of the auto companies with the savings.”
But cheap gas is bittersweet news for an economy that shed millions of jobs this year. Pump prices were driven down mostly because Americans are staying home more. Transportation Secretary Mary Peters said the travel habits of Americans are “fundamentally changing” as drivers clocked 9 billion fewer miles in October, even as gas prices plunged.
Awful holiday retail sales, job uncertainty and shrinking global trade all suggest that demand for energy from both businesses and consumers will continue to fall into next year.
New evidence that OPEC members had cut production and a weaker dollar boosted crude prices Friday in light trading. Light, sweet crude for February delivery rose $2.36, more than 6 percent, to close at $37.71 a barrel on the New York Mercantile Exchange. Trading was closed Thursday for Christmas.
At the pump, gas prices fell six-tenths of a penny to a new national average of $1.642 a gallon Friday, well below the year-ago average of $2.981, according to AAA and the Oil Price Information Service. The last time retail prices dipped this low was in February 2004, Kloza said.