Prices at the pump have been halved since July

COLUMBUS, Ohio • Oil prices on Thursday hit levels not seen in more than three years, and retail gasoline prices are now below $2 across nearly half of the country, on dour economic reports suggesting a painful economic pullback.

Benchmark crude fell as low as $48.50 a barrel on the New York Mercantile Exchange, levels last seen on May 18, 2005, when oil hit $46.80 a barrel.

Meanwhile, average prices at the pump fell again overnight. Nationally, it's close to $2 a gallon, with the average price in 23 states even less than that.

"After this summer, this is wonderful ... wonderful," said Anuj Dayal, a cab driver in New York's Hell's Kitchen neighborhood. "I hope gas is $1 soon. I hope it's free."

Gasoline prices have been halved since reaching a record above $4 in July, but relief from record crude prices have come amid a global economic meltdown.

Light, sweet crude for December delivery fell 7 percent, or $4, to settle at $49.62 in Nymex trading.
Oil prices have fallen 66 percent since reaching a record $147.27 a barrel in mid-July.

Oil analyst Stephen Schork wondered if $50 would even hold.
"Maybe $50 is too conservative given the putrid, putrid look at the economy," he said.

"If we're not out of these doldrums nine months from now we're looking at $30 oil."The Energy Department's Energy Information Administration also reported Thursday that natural gas storage levels far exceeded expectations, driving prices sharply downward.

Natural gas inventories held in underground storage in the lower 48 states rose by 16 billion cubic feet to about 3.45 trillion cubic feet for the week ending Nov. 14.

Analysts had expected little to no change in reserve levels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.The average price for gasoline is on pace to fall below $2 nationally by the end of the week.

The decline comes as motorists continue to drive less. The Federal Highway Administration reported Wednesday that Americans drove 10.7 billion fewer miles, or 4.4 percent less, in September than a year ago, the 11th straight monthly decline. Americans have now driven 90 billion fewer miles over those 11 months than they did the year before.

Rural interstate travel fell 8 percent in September and urban interstate travel declined by 3.9 percent.