Could gas prices fall to $1 a gallon?

COLUMBUS, Ohio — Oil prices hit four-year lows Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.

A gallon of gasoline can be had for 50 cents less than it cost just last month, and people are starting to talk about $1 gas.

Granted, gas prices are a long way off from that magic number last seen in March 1999 when prices were at 97 cents a gallon, according to motor club AAA.

Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express.

But consider what has happened since July 11 when a barrel of oil hit a record $147.27 and a gallon of gas was $4.117 on July 17. In less than five months, oil has fallen 72 percent.

Just this week, in which the National Bureau of Economic Research determined that the U.S. is in recession, oil has fallen 25 percent.

On Friday, light, sweet crude for January delivery settled at $40.81 a barrel on the New York Mercantile Exchange, down by nearly $3 per barrel. Prices fell as low at $40.50, levels last seen in December 2004.

Gasoline futures for January delivery tumbled to 90 cents. For gas prices to get close to a $1, oil prices probably would need to fall another $10 a barrel — something that would have been impossible to fathom during the first part of this year as oil prices soared near $150 per barrel.

In the Seattle-Bellevue-Everett region, AAA reports the current price for regular gas is $1.93 a gallon, compared to $2.56 a month ago and $3.21 a year ago.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said Thursday on his blog that retail prices could fetch $1.25 a gallon soon in parts of the Midwest, including Ohio, Indiana, Illinois and Missouri.

Already, some parts of the country are seeing prices around that level. The Web site gasbuddy.com, where motorists can post local gas prices, says motorists can fill up for $1.29 in Neelyville, Mo., a village of about 500 people near the Arkansas state line.

With layoffs dominating the news, demand for gasoline will fall even more in early 2009 as work-related driving plummets, Kloza said.

Kloza doesn't think prices will make it to a $1. Gas prices neared a dollar last time on Dec. 18, 2001, three months after the terrorist attacks. The country was in its last recession, and prices hit $1.08 a gallon.