Chicago Area Local News

CHICAGO (CBS) ― Motorists throughout the Chicago area and across the country are seeing significant relief at the pump.

The American Auto Association reports the national average is now $2.95 per gallon. In Illinois, the average is $3.12, and Indiana $2.84. Even in several Chicago suburbs, gas prices under $3 have been spotted. 

Experts say gas prices likely will fall further, and figure to hit $2.50 to $2.60 a gallon if oil goes down to $50 a barrel as some analysts suspect it will.

As CBS 2's Joanie Lum reports, at the Gas Stop in Hammond, Ind., regular unleaded was selling for $2.79. Customers were pleased, to say the least.

Fuel prices have been falling for the last month – 51 cents in Illinois, 56 in Indiana. It was not so long ago that oil prices were flirting with $150 per barrel, and customers were paying $4 per gallon at the gas pump.

"It was $2.99 a couple of weeks ago – I had gotten gas here for $2.99, and every day I come out here, it drops more, more, more, more, more," said Bernard Sharun.

Motorist Steve Donaldson says he plans to stay in savings mode.

"When it was getting up near $4, $4.50, yes, I cut down, I had to," Donaldson said, "and now that it's easing up a little bit, no, I'm going to still stay cheap."

Economists say paying less at the pump has provided some relief for the average consumer.

"The amount of money that consumers will save from lower oil prices is roughly the same size as the stimulus package that we got in 2008," said Standard & Poor Chief Economist David Wyss. "That's a significant boost to consumer purchasing power."

Economists add that the drop in gas prices will get people to go to the mall and spend money, but CBS 2's unscientific poll at the Gas Stop in Hammond indicated that customers there were still electing to save money, and they said they were not going to go out and spend because gas cost less.

Other economists said the need to save money in other areas was also a dominant concern that outweighed the drop in gas prices.

"The amount of wealth that has been lost exceeds drops in other costs," said Ben Brockwell, director of data pricing and information servicing for the Oil Price Information Service "I'm more concerned about the financial condition of my 401(k) and I am more concerned about the pessimistic view ... of the economy."

Stock prices, already in a bear market, collapsed as credit markets froze, hitting multiyear lows this month. About $2.4 trillion in shareholder wealth was lost just last week alone.

The economy, which has shed 760,000 jobs this year through September as the unemployment rate has risen to 6.1 percent, figures to be in a recession as severe as the country has seen since the early 1980s.

Oil prices late last week were down $75 -- or 51 percent -- since catapulting to a record high of $147.27 on July 11. Some theorists argued that the cause was "peak oil," the point after which the worldwide supply for oil cannot keep up demand, and forecast that oil prices would continue going up for years until transportation was rendered unaffordable.

The stunning collapse in gas prices comes a month after prices hit $5 a gallon and gas lines formed in some parts of the country after hurricanes Gustav and Ike shut down a big hunk of the nation's refinery capacity along the Gulf of Mexico.

While motorists welcome the decline in prices, they are wary given the huge fluctuations over the past couple of years, said Kit Yarrow, a consumer psychologist at San Francisco's Golden Gate University who has studied how high oil prices have affected Americans' buying behavior.

"People have learned that they can't trust gas prices to stay low," she said.

She said she doubts motorists -- who cut fuel consumption as prices rose -- will return to their old ways even as prices have come down.

"Everywhere you go, be it the store, the diner, whatever, you hear people talking about their gas costs and how they need to cut back," David Robinson, 67, of Lakewood, N.J., said recently as he was getting coffee at a convenience store. "You still hear it, even though gas keeps dropping."

Others are not so sure.

"Gas prices are crazy, crazy, crazy," said Zena Newson as she prepared to fill up her Dodge Caravan at a gas station near downtown Chicago recently.

Newson, who spends up to $240 a week on gas, said between being a single parent and running a catering business, she can't afford to change her driving habits -- high gas prices or no high gas prices.

"I have not changed anything," she said. "We might not eat out as much, (my daughter) might not get those shoes she wants."

Tom Hines, 41, a program manager at a Phoenix utility company, doesn't think the erratic fuel prices have permanently shifted the nation's environmental conscience.

"It's like we've seen in the past," he said. "Detroit will start do produce hybrids and then all of a sudden gas prices go back down and then everybody forgets all about it. I think people are starting to be more aware but I think we still have a long way to go."

Gas prices will also likely be affected by an OPEC meeting Friday to discuss oil production levels.

The Associated Press contributed to this report

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

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