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COLUMBUS, Ohio – Oil tumbled below $44 a barrel Thursday and average gasoline prices slipped under $1.80 a gallon, both four year lows, as unemployment benefit claims hit a 26-year high and major companies announced more job cuts.
The unprecedented decline in energy prices has provided some relief to consumers and businesses, it has occurred as the nation dips into recession.
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A pressure-gauge on a gas pipeline near Kiev, Ukraine. Prime Minister Vladimir Putin has warned that Russia will cut natural gas supplies that transit through Ukraine to Europe if Kiev does not pay its bills or siphons gas meant for other customers. [Agencies]
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Fewer people have jobs to drive to. Gasoline futures for January delivery closed below a dollar, with optimism about the nation's economic health in serious decline.
It was the first close below $1 since 2006, when gasoline began trading in the current format. When gasoline included the additive MTBE, it last crossed the $1 barrier in February 2004.
Veteran energy analysts were stunned as they watched light sweet crude dip nearly 7 percent, or $3.12, to settle at $43.67 on the New York Mercantile Exchange by early afternoon.
Just four months ago, crude rocketed close to $150 and the average gallon of gasoline went for more than $4 per gallon. Crude has fallen nearly $27 in just one month.
No one believed crude would lose $100 in value between July and December, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
Some analysts believe demand could evaporate further early next year.
"I think the traders are looking at that and they're saying, 'Well, December is OK, it's relatively balanced here and there, but my goodness all of these layoffs after Christmas, the cold weather, the cocooning, the bills coming due after Christmas, January is just going to be awful,'" Kloza said.
Dour economic reports continue to spill out during a week when the National Bureau of Economic Research declared the economy entered a recession in December 2007.
The US government said the number of people continuing to claim unemployment benefits last week reached 4.09 million, the highest level since December 1982, when the economy was emerging from a recession.
Factory orders plunged a bigger-than-expected 5.1 percent in October caused by big cutbacks in demand for steel, autos, computers and heavy machinery. It was the largest decrease since an 8.5 percent fall in July 2000.
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