World Economic

Five years ago, drivers here would have been horrified by $2 a gallon gasoline. These days, they might feel fortunate.

The current economic malaise and corresponding drop in energy demand means motorists across the metro area are paying almost half as much for fuel as they did seven weeks ago, when Hurricane Ike drove crude oil and gasoline prices to near-record levels.

In fact, the average price of gas in the city of St. Louis and surrounding Missouri counties has fallen for 50 consecutive days since then to $2.11 a gallon on Tuesday, according to AAA Missouri. By Wednesday, prices had slipped below $2 at many stations.

"We’re looking at prices now that are well more than $1 below what we were paying a month ago," AAA spokesman Mike Right said.

And prices in parts of southern and western Missouri are even cheaper than they are in St. Louis. In Kansas City, Mo., the average price of regular gasoline was $1.91 on Tuesday.

The decline at the pump follows a steep drop in crude oil prices, which slipped back below $66 a barrel on Wednesday after an Energy Department report showed an unexpected increase in gasoline inventories.

The report showed that gasoline supplies increased 1.1 million barrels last week to 196.1 million barrels. Analysts had expected gasoline stocks to drop.

"There is plenty of inventory, given how weak demand is," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass payday advance loan.

It’s uncertain how much lower gasoline prices will go, observers say.

"I think it’s about to bottom out unless we see another dramatic decrease in crude oil," Right said.

There likewise are no signs that oil and gasoline demand will rise much, suggesting prices could stay near the current level for a while.

The most recent data from the Federal Highway Administration showed Americans drove 15 billion fewer miles, or 5.6 percent less in August than they did a year ago. And the Energy Information Administration, part of the Department of Energy, estimates domestic petroleum consumption will fall by 830,000 barrels in 2008.

Lower gasoline prices could result in a slight uptick in consumption, but probably not enough to prompt motorists to go back to gas guzzling ways.

"Until we see consumers change their habits, or get a handle on world financial troubles, I don’t see demand picking up that much," said Darin Newsom of commodities research firm DTN in Omaha, Neb.

Bloomberg News contributed to this report.

jtomich@post-dispatch.com | 314-340-8320

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