Consumer

CHICAGO (CBS) ― Going over the river and through the woods, or down the expressway as the case may be, will cost a lot less this Thanksgiving.

As CBS 2's Joanie Lum reports, gas prices are at their lowest since March 2005, averaging only $1.98 per gallon nationally and now under the national average in Chicago. Historically, gasoline prices in Chicago have been among the most expensive in the nation--until now.

On the Dan Ryan Expressway at 76th Street early Monday, a BP gas station posted $1.869 per gallon of regular unleaded, and a nearby Mobil station posted $1.899 per gallon. In the suburbs, the prices are even lower.

Not all local gas station have prices under $2, and it might take some time to find one that does. But those who have found them are pleased indeed.

At the Mobil station, it was a nice surprise for motorists who filled their tank for a little more than $20.

"This is great, I mean, for any consumer, this is a wonderful thing," said Merita Mayberry, who filled her tank for $22.87. "$1.99 – can you believe this?"

"I saved about $30," said Tanya Laboy.

The staff of the non-profit agency the Safer Foundation brought its fleet of eight vans to the South Side to fill up for the week.

"I live on the West Side of Chicago; gas is still above $2," said Abraham Ramos of the Safer Foundation. "So when I was out here Friday, I saw that the gas was a lot cheaper here, so I figured I'd come down here and get some gas."

Before 9 a.m., the BP station ran out of regular gas. But motorists were happy to purchase premium.

"We had to get 93 because all the gas ran out," said Darryl Watson of the Safer Foundation. "It's running out as we sit here talking."

The reason for the lower gas prices is a free-fall in crude oil prices, which set staggering records in July at over $147 per barrel, but are now under $50 for the first time in 3 1/2 years.

With the dramatic drop, holiday travel plans are looking brighter.

"At least I know I can fill up in Chicago before I leave and save some money before I go," said Eddie Walters. "I'll have a little bit more money to spend when I go out of town."

Experts are saying the lower gas prices will likely continue to drop for the rest of the year and beyond.

"It's impossible to know exactly how low the price of gasoline will eventually go," AAA spokesman Geoff Sundstrom said Friday. "Households can, however, reasonably anticipate that lower fuel prices will be the norm throughout the rest of this year and probably into early 2009."

The Federal Highway Administration reported this week that Americans drove 10.7 billion fewer miles in September than a year ago, the 11th straight monthly decline.

But there's some evidence that motorists may be heading back to the pump in greater numbers as gasoline prices fall.

MasterCard SpendingPulse reported Tuesday that even though gas consumption last week was down 2.8 percent from a year ago, it was the smallest year-over-year decline in more than two months.

Because so many people chose to drive or cancel their vacation altogether, airfares are also falling. Flights are not full, so the airlines slashed their airfares about 25 percent for the holidays – bad news for people who purchased their tickets about a month ago.

But other experts say the drop in oil prices isn't all good news.

"This is just a reflection of the poor state of the economy, and the oil market is reflecting this global slowdown," oil analyst Andy Lipow told CBS News earlier this month. Experts say OPEC charges what it can get, which isn't much in an economy with high unemployment and low consumer confidence.

As fuel prices skyrocketed during the summer and drove up the prices of food and other commodities, the theory of "peak oil" began to gain credence among some consumers. The theory claims that the world's oil production either has already peaked and is now in decline, or soon will.

The pessimism, which has been the subject of Internet alarmism for several years, stems from a legendary episode in the history of petroleum geology. Back in 1956, a geologist named M. King Hubbert predicted that U.S. oil production would peak in 1970. Hubbert was correct – U.S. oil production did peak in 1970, and it has declined ever since.

Some "peak oil" adherents view the theory as an incentive to work harder on alternative energy. Others claim it's too late for that, and forecast an apocalyptic future in which industrial society and the global marketplace collapse and give way to local micro-economies with backyard farms, abandoned malls and marauding hordes.

Many "peak oil" adherents were expecting oil prices to be skyrocketing to $300 per barrel, but the opposite has happened. Now, how low prices can go is anyone's guess.

"Do not trust anyone in this market who tries to convince you that oil cannot go below $40," trader and analyst Stephen Schork said in his report Friday. "The same way no one had a clue how high prices could go last July, there is no telling how low we can go now."

CBS 2's Joanie Lum, CBS News and the Associated Press contributed to this report.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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