"We're dropping like a rock today," said Tom Kloza, chief oil analyst for the Oil Price Information Service. "We are on a rendezvous with lower prices across the country."
But economists aren't optimistic about what consumers would do with the money they figured to save. With retirement accounts battered, home values hurting and confidence bruised, Americans are more likely to catch up on their bills and savings at a time when the economy needs them to go out and shop, some experts say.
"More than 70% of the U.S. economy is consumer spending, and the real risk going forward is that they won't spend," said Edward E. Leamer, director of the UCLA Anderson Forecast. "Take your wife or your husband out for a nice meal at a restaurant. Buy a pair of shoes, the kind of normal things we used to do."
Motorists say they aren't feeling any of that old love for conspicuous consumption.
Lisette Mata, 21, a customer service representative for a check-cashing business, was pumping gas at a West Hollywood Chevron as a worker updated the station's price sign. When the price for regular changed from to $3.43 a gallon from $3.49, she looked disgusted.
"What would I do with the money? I'd pay bills, buy groceries. I can't afford anything else right now," Mata said.
Abel Sahid, 49, was taking a break from a nearby plumbing job, buying a bottle of water at a Chevron in downtown Los Angeles. His biggest hope for lower gas prices was that more people might be able to afford to hire him.
"It would be much better for everyone, but I think I would save the money. Most of my savings are gone," Sahid said.
Traditionally, lower fuel prices lead consumers to drive more and to buy larger, less fuel-efficient vehicles. That was the effect of an oil price drop in 1980, which, experts say, ultimately led to the advent of sport utility vehicles. But that may not be the case this time around, said Mary Novak, analyst at Global Insight.
"It took a pretty long period of high oil prices to convince people not to buy SUVs," she said. "It'll take a while, too, for them to be convinced by low prices to start to buy them again."
Should oil prices stay low, it could reduce pressure on automakers' programs to develop fuel-efficient cars. General Motors Corp., Toyota Motor Corp. and Chrysler all ramped up development of hybrids, plug-in hybrids and electric cars in the face of $4-plus gas. And though the carmakers need fuel-efficient cars to comply with strict new mileage rules, if gas prices are too low, such products may not appeal to consumers.
