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By Samuel R. Avro on Dec 27, 2008 with no responses

Cheap Gas Means $1 Billion per Day Savings

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Can the price at the pump drop much lower?

As the national average price for unleaded gasoline hits a five year low to $1.63 a gallon, the country is saving more than $1 billion a day on their gasoline bill.

Tom Kloza, Chief Oil Analyst at the Oil Price Information Service, estimates that Americans were paying $1.613 billion per day on gasoline nearly six months ago. Since then, gas has plummeted from over $4 a gallon to well under $2. He estimates that the daily cost for gasoline is now $611.5 million – a savings of more than a billion dollars.

Gas prices dropped for its eighth consecutive day, according to the American Automobile Association (AAA), to $1.630 a gallon, down 1.2 cents from the previous day.

According to Kloza, the new Millennium began with an average gas price of $1.2962 gallon – a number which he thinks is reachable in the next 40 days, if the new year begins with more “layoffs and economic misery, and if inclement winter weather keeps working folks off the road,” Kloza said in his recent blog post.

He does not believe that we will see $1 gallon gas across the nation. Perhaps the Rust Belt –an area that encompasses parts of the Northeast, Mid-Atlantic and Mid-West states which traditionally record the lowest fuel prices– may get a taste of it in late January, but conditions in the crude oil market will need to get a lot worse in order for $1 gas to be recorded nationwide.

“It would probably take a sustained drop in crude prices to below $25 bbl (the price would have to remain there for weeks, as opposed to days) in order to see $1.00 gal or less nationwide,” said Kloza.

Gas prices have dropped 60 percent since reaching their record high in July.

Utah boasted the lowest average gas price ($1.45), while Alaskans ($2.53) suffered with the highest average price in the nation.