Long-awaited relief at the pump continued over the last week with the nation's average retail gasoline price falling below $2 a gallon to its lowest level in 46 months, the Energy Department said Monday.
It's also been that long since California's average gasoline price was below $2 a gallon. But the state seemed likely to challenge that old barrier sometime this week.
Gas prices have fallen so far and so fast that some experts are concerned Americans who have drastically curtailed their thirst for gasoline might be ready to guzzle again.
"GM dealers are probably seeing more interest in big SUVs this week than they did in July," said Lester Lave, an economics professor at Carnegie Mellon University's Tepper School of Business.
The U.S. average price of a gallon of self-serve regular gasoline fell 18 cents over the last week to $1.892, according to the Energy Department's weekly survey of filling stations. That was $1.205 below the year-earlier price and the lowest since the $1.853 recorded on Jan. 24, 2005.
The drop was even more dramatic in California, where the average fell 26.2 cents during the week to $2.112. It hasn't been lower since $2.091 gasoline was recorded Feb. 14, 2005.
California's average was $1.286 below the year-earlier price.
Truckers and any business that relied on diesel fuel to move raw materials or products were also enjoying a huge change. The average U.S. diesel price, which peaked at a national average of $4.764 a gallon on July 14, was down to $2.664 on Monday.
The turnaround was even more exceptional in California, where diesel has fallen by nearly half from $5.027 a gallon on May 26 to $2.605.
Lave said that Congress shouldn't give U.S. automakers a bailout unless they promise to focus on smaller, fuel-efficient and alternative-technology vehicles.
"Americans might go back to their old habits," Lave said, "and we would be shooting ourselves not in the foot but a little higher up."
Gasoline prices may be close to bottoming out, said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey. That might not be so bad, he said, because fuel costs are being dragged lower in part as a result of the economic malaise here and abroad.
"It's going to take more of the same miserable economy to take gasoline prices appreciably lower," said Kloza, who said that California could come close to averaging less than $2 a gallon in the next week or so.
The oil service's daily survey of credit card receipts at 10,000 gas stations around the U.S. showed that the number of states with average prices of less than $2 a gallon had more than doubled in the last week, to 36 from 15.
Crude oil futures got a big bounce Monday after the dollar weakened in value against the euro and Citigroup Inc. received a bailout that could help the bank stay afloat, analysts said.
Light sweet crude for January delivery jumped back above the $50 barrier on the New York Mercantile Exchange, climbing $4.57, or 9%, to $54.50 a barrel.
Phil Flynn, vice president and senior market analyst for Alaron Trading Corp., said that oil probably would head lower again.
"The government is not going to be able to write a check like that every day to keep this going," Flynn said.
Lave said that the oil markets would be just as volatile over the next five years as they have been in the last five months. He said oil prices had less to do with actual supplies and more to do with swings in demand and too much speculation over whether there was too much oil or too little.
"The supply of oil has remained relatively constant," Lave said.
"But futures markets have been overshooting on the upside when economies are booming and there are concerns about supply. They are doing the same now over a potential glut as the world moves into a recession."