Slope’s still slippery on how low gas goes

Oil’s half-off sale got better Thursday as crude tumbled $4 to $49.62 a barrel, with market watchers predicting even more slippage ahead -- coming soon to a fuel pump near you.

Slowing demand and a slumping economy are behind crude’s astounding plunge of nearly $100 a barrel since July 11, when futures traded for more than $147 on the New York Mercantile Exchange, to edge below the psychologically significant $50 barrier. The decline has brought relief to beleaguered consumers, dropping retail gas prices under $2 a gallon in many spots.

The gas-price party was in full swing Thursday in Pasadena, where two independent service stations were staging a mock price war to sell the cheapest fuel in town.

Motorists were lined up around the corner for $1.77-a-gallon regular at the no-frills Garo Gas station on East Washington Boulevard and down the street at Fastop, where the price was $1.79.

Some drivers were so eager to take advantage of the relative bargain that they risked running out of gas just to find the two stations. One who rolled up at Fastop with his engine sputtering from lack of fuel was architect Helbert Maldonado. Maldonado forked over three $20 bills and watched as it netted him exactly 33.351 gallons for his black GMC Yukon XL.

“It’s been at least two years since $60 paid for that much gasoline,” said Maldonado, 35, whose family includes a wife, four children and a dog. “In the economy we’re in now, with a family as big as mine, it feels really good to save a little money.”

The average U.S. price for a gallon of self-serve regular dropped 2.7 cents overnight to $2.02 on Thursday, according to AAA’s daily price survey. The Los Angeles-area average was $2.327 a gallon, down 3.3 cents.

The same survey showed that the number of states that were averaging less than $2 a gallon had grown from 15 to 23 since Monday, led by Missouri, where prices were $1.721 a gallon.

That puts the two Pasadena stations among the cheapest in the nation. Garo Melidonian, owner of Garo Gas, said he dropped his prices to $1.97 a gallon Sunday, then to $1.87 and on to $1.84, with the nearby Fastop coming in slightly higher or lower each time.

To motorists, it looked like a good old-fashioned price war, and they were eager to participate.

“Buying it as cheap as this, I could cruise all day and not worry about gas,” Oscar Herrera said while staring at Garo’s pump price as if he didn’t quite believe it. Herrera, a 26-year-old dental assistant driving a Nissan Quest van, didn’t really need any fuel but bought $15 worth anyway.

“With prices and rent at what they are today, this helps big time,” Herrera said.

Looking at the line of cars and occasionally playing traffic cop, Melidonian said, “Other stations do not want long lines. I love long lines. I want the business.”

Two doors down at Fastop, one of the managers helped push an SUV that had run out of gas over to a pump. He explained that the real price war wasn’t between the two independent stations but against all the nearby brand-name stations, which were still charging $2.27 to $2.29 a gallon.

“They are still selling off the old gasoline that was more expensive. Ours is new gasoline,” Danny Weaver said before ringing up another Fastop customer. “Sometimes the buying works in their favor, and sometimes it works in favor of smaller independents. It’s in our favor right now.”

Crude prices might soon allow the pump numbers to drop even further.

Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago, said the oil market was looking for Congress to agree on an auto industry bailout package that would keep auto workers employed and help stabilize demand.

“Instead, it was all high-stakes politics over committee chairmanships. People voted for change, but I don’t think this is what they had in mind,” said Flynn, who predicted that oil could drop as low as $35 a barrel if it ended the week under $50.

John Kilduff, vice president for risk management at MF Global in New York, blamed the gloomy economic picture and consumers who were holding on to their money in spite of the plunging price. He said oil could hit $40 a barrel or lower.

“It’s just been a complete about-face. Add in the jobless claims reaching a 16-year high, and even $40 a barrel starts to look tenuous,” Kilduff said.

But Joe Hahn, an assistant professor who models energy prices at Pepperdine’s Graziadio School of Management, said oil’s downward spiral could reverse as the global economy recovers next year and boosts energy demand, taking the commodity back to $80 or $90 a barrel.

“Before, it was the speculation of demand outpacing supply that sent oil rising,” Hahn said. “Now, it’s the speculation that supply will outpace demand that is driving the market.”

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ron.white@latimes.com