COLUMBUS, Ohio (AP) – 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 reach $1 a gallon.
Crude prices plunged immediately, at one point reaching $40.81, after the Labor Department reported a half million people had lost their jobs in November.
Demand for fuel has withered amid an economic tailspin, as companies cut back production and slash jobs.
Light, sweet crude for January delivery fell to $2.47 $41.20 a barrel on the New York Mercantile Exchange by early afternoon.
The Labor Department reported that employers slashed a far worse-than-expected 533,000 jobs and the unemployment rate jumped to a 15-year high of 6.7 percent. Analysts were looking for job losses of 320,000.
It was the sixth straight day of declines for crude prices, with each release of new economic data outlining a stunning deterioration for the U.S. economy. Earlier this week, the National Bureau of Economic Research determined that the U.S. has been in a recession for a year.
Since the start of the recession, the economy has lost 1.9 million jobs, the number of unemployed people increased by 2.7 million and the jobless rate rose by 1.7 percentage points.
Crude prices have fallen 72 percent from record July highs.
"At this point, it's just keeps going, going and going," Peter Beutel of Cameron Hanover.
Crude could soon reach levels last seen in July 2004 when prices were last below $40 a barrel.
Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express. That is down 63.2 cents from a month ago, $1.261 from a year ago and $2.338 from just five month ago.
The jobs numbers suggest that demand for gasoline, which has been running well below year-ago levels even with the cheaper prices in the last several weeks, will fall even more in early 2009 as work-related driving plummets, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
"I believe that January 2009 will represent the most 'challenging' and ugly economic month of my lifetime, and my first memory is of Sputnik," Kloza posted on his blog Thursday.
He said retail prices could reach $1.25 a gallon soon in parts of the Midwest, including Ohio, Indiana, Illinois and Missouri.
In Neelyville, Mo., population 501, prices at one station in the southeast Missouri town hit $1.29, according to gasbuddy.com, where motorists post gas prices.
In other Nymex trading, gasoline futures dropped more than 4 pennies to fetch 92.7 cents. Heating oil slid 6.5 cents to $1.44a gallon while natural gas for January delivery shed 24.7 cents to sell at $5.77 per 1,000 cubic feet.
In London, January Brent crude slipped by $2.42 cents to $39.86 on the ICE Futures exchange.
i hope it doesnt stop jus go under 50 ill be happy
