Gas prices are low, but so are 401(k)s

Gut-wrenching declines in the stock market, a financial panic that some have compared to the Great Depression, and the realization that the U.S. may be headed to its worst recession in over a generation have trumped what should otherwise be good news: the return of $3-a-gallon gas.

Better yet, with 401(k) statements arriving in the mail and families worried about keeping their homes, has anyone even noticed?

A gallon of regular gasoline fell 4.9 cents overnight to a new national average of $2.991, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have not been below $3 nationally since Feb. 16.

Saturday’s price is slightly above the national average price of $2.81 a year earlier, but 27% lower than the all-time high of $4.114 reached July 17. Before Saturday, gas prices already were below $3 in 23 states, according to AAA.

According to the survey, gas was the least expensive in Oklahoma, with a gallon of regular at $2.58. Other cheap states were Missouri and Kansas, while the most expensive was Alaska, with a gallon at nearly $3.92. California and Hawaii also ranked high.

Oil prices, meanwhile, are down $75 -- or 51% -- since catapulting to a record high of $147.27 on July 11.

“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%, figures to be in a recession as severe as the nation has seen since the early 1980s.

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.

As refinery capacity has come back online, prices began dropping dramatically and now are approaching levels where they were a year earlier. In Ohio, for example, prices averaged $2.80 Friday, down nearly 4 cents from a year ago.

Gas prices are expected to fall further, and if oil retreats to $50 a barrel, as some analysts are predicting, motorists will be paying even less -- $2.50 to $2.60 a gallon.

While motorists welcome the decline in prices, they are wary given the huge fluctuations over the last 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 doubted that motorists -- who cut fuel consumption as prices rose -- would return to their old ways even as prices came down.