Retail gasoline prices dipped for a 17th week since July 4, falling below $2 a gallon in a number of states and approaching $1.50 at some service stations.
While consumers, worried about a weak job market and slumping investments, are grateful for the price relief, economic reports increasingly suggest people are hanging onto whatever savings they see at the pump.
Oil prices hit a 20-month low Tuesday as Wall Street offered yet more evidence that consumers have gone into hiding.
Retail gasoline prices fell overnight to a national average of $2.22 a gallon, dragged down by the falling price of crude, which now costs 60 percent less per barrel than it did in mid-July. The average price for regular unleaded gasoline has fallen nearly 32 percent in the last month.
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At the Raceway gas station on Cherry Road in Rock Hill, night manager Ash Patel said the station has been very crowded the past few days. Gas was selling for just under $1.84 a gallon there Tuesday.
“They love it and are calling their friends about it,” Patel said.
Light, sweet crude for December delivery fell $3.08 to settle at $59.33 a barrel on the New York Mercantile Exchange, the lowest closing price since March 2007. Crude dipped a dollar lower in earlier trading.
The latest decline in crude prices comes two days ahead of a report from the International Energy Agency, which some analysts expect will cut its 2009 oil demand forecast for the third consecutive month.
Sharp swings in crude prices are taking place almost daily on the New York trading floor.
While the Nymex contract is now trading near first-half 2007 prices, the difference then between daily highs and lows was about $1.50 a barrel. Now, the average daily range is about $5.50 a barrel, with recent daily peaks at $9.50, said analyst Olivier Jakob of Petromatrix in Switzerland.
The overall trend for oil and gasoline prices, at least for now, is down.
Investors have grown increasingly leery about the swooning U.S. economy, which faces its worst recession in decades.
Industry analysts had expected China and India to continue buying crude if the U.S. and other Western nations went into recession, but the booming economies of Asia have begun to show signs of fatigue.
A $586 billion stimulus package in China boosted markets globally early Monday, but those gains fizzled quickly and a sell-off that began in the U.S. continued in Asia and Europe.
On Tuesday, the Dow sank more than 250 points after homebuilder Toll Brothers Inc. and Starbucks Corp. gave investors more evidence the housing market and consumer spending are getting weaker.
Toll Brothers said quarterly revenue fell 41 percent from the year-ago period, while Starbucks reported lower sales across the coffee chain, leading to profits that fell below analysts' expectations.
Gasoline fell again overnight, dipping 2 cents to a national average of $2.22 for a gallon of regular unleaded, according to auto club AAA, the Oil Price Information Service and Wright Express. The average price could be headed to $2 a gallon nationally by year's end, AAA has said.
The price already has fallen well below $2 in some places.
In Missouri, the Web site GasBuddy.com, where consumers post prices they spot, said a few stations in the Kansas City area were charging $1.61 for regular. Drivers were paying only slightly more in parts of Oklahoma, Iowa, Ohio and Texas.
Oil prices fell despite signs that OPEC members are going ahead with production cuts agreed to at an emergency meeting in Vienna, Austria, last month.
Many analysts are expecting another cut by the Organization of Petroleum Exporting Countries, which will meet Dec. 17 in Oran, Algeria.
The prime minister of Qatar said Tuesday that “fair” oil prices of between $70 to $90 per barrel would ensure that expensive oil exploration could continue, avoiding rapid price surges in the future.
Sheikh Hamad Bin Jassim Bin Jabr Al-Thani said that while oil prices below $70 a barrel may seem like a gift to consumers, it could trigger price spikes in the near future when demand picks up.
But for now it is waning energy demand, not the supply controlled by OPEC, that is dominating crude prices.
Events that earlier this year threatened to cut off supply in oil producing nations no longer appear to have the power to send prices upward.
Prices this week fell even as militants in Nigeria resumed attacks on the country's oil installations. The military said it killed eight people while guarding a facility in the country's oil-rich south.
Militants frequently attack oil facilities, seeking to hobble Africa's biggest petroleum industry and force Nigeria's federal government to send more oil funds to the southern states where the crude is pumped.
Observer staff writer Adam Bell and Associated Press writers Pablo Gorondi and Alex Kennedy contributed to this report.