Gas prices in the U.S. fall below $2 a gallon

November 21, 2008

For the first time in nearly four years, the national average for a gallon of gasoline in the United States has fallen below $2. The American Automobile Association (AAA) reports local, state, and national averages daily, and Friday's findings show that the national average for a gallon of unleaded gasoline is now at $1.989 cents, free-falling from the record high of $4.114 a gallon reached on July 17. Friday also marks the 64th straight day in which retail prices for gasoline have fallen.

The sharp drop in prices does not automatically translate into more driving trips for Americans, however. Next week's Thanksgiving holiday, traditionally one of the most traveled holidays of the year, will see a decline in drivers on American roads. 41 million people are expected to drive at least 50 miles for Thanksgiving, a decline of 1.4% from the previous year and the first decline since 2002, while the economy was still shaky after the September 11 terrorist attacks.

The drop in gasoline prices has correlated with the free-fall in the price of crude oil, resting below $50 a barrel from a peak of $147 in July. With the world coming to grips with the beginnings of a recession, low gas prices are not translating to freer spending habits or to discarding ideas for hybrid and electric cars.

Despite falling gas prices, the mood was muted at this week's Los Angeles Auto Show. Ford introduced a modified version of their hybrid Fusion automobile, amid reports from Capitol Hill calling the Big 3 automakers "out of touch" with today's necessities, and BMW unveiled an all-electric car called the Mini E.

Peter Beutel, president of the energy risk management firm Cameron Hanover, believes national gas prices will bottom out around $1.75. "I think in some of these very low-cost areas like New Jersey or Texas, you might even see it come down to $1.65," he said. Currently, unleaded gasoline is below $2 a gallon in 23 different states. Alaska has the highest statewide average, at $3.077 a gallon, and Missouri the lowest, at $1.690.