Cheap Gas Alone Can't Cheer Holiday Drivers

Tis the week before Christmas, and all through the States, drivers heave sighs of relief, at falling gas rates.

The bursting of the commodity bubble has had at least one salutary effect: Gas prices that averaged more than $4 a gallon in mid-July now stand below $2 in all but two of the 50 states and Washington, D.C., according to GasBuddy.com. We can ruefully thank the deepening global recession for that. Declining demand has caused crude oil prices to drop to the mid-$40s a barrel, off 70% from a summer peak of nearly $150.

That's a huge dip, to be sure, but it probably won't be enough to save the holiday driving season. The American Automobile Association figures the number of folks traveling by car during the holidays will almost certainly be lower than last year's figure of roughly 65 million.

"The other four holidays this year have all seen declines and Thanksgiving was the biggest year-to-year decline, so I see no reason that the trend should not continue," says AAA spokesman Robert Sinclair. "The economy continues to deteriorate, people are losing their jobs. The only thing that's good is that gas is cheap."

Or cheaper, anyway. Some states' gas prices are much lower than others, naturally. In the remote locales of Hawaii and Alaska, gas still averages much more than two bucks a gallon. (See chart below.) At the other end of the pump, holiday travelers hitting the ski slopes of Wyoming and Utah will find they have more cash to drop at the midmountain lodge.

Despite our mounting economic woes -- and the fact that cheap gas also points to the increasing menace of deflation -- it is comforting to know that money once poured into the tank can now be put toward a Christmas goose, some Hanukkah gelt and Kwanzaa presents.