Journal-News.com

It's good news and bad news for consumers as oil prices continue to fall amid low demand and a looming economic recession.

Oil prices have fallen more than 40 percent, trading around $86 a barrel today. But if the $700 billion financial bailout doesn't work and the economy plunges into a recession, prices could fall further — as low as $50 a barrel, according to a report by Francisco Blanch, head of global commodities research for Merrill Lynch.

Oil demand in the U.S. has already dropped six percent since July, resulting in prices below $3 a gallon in many areas, said Ray Keyton, spokesman for AAA.

"The main reasons why gas is dropping as a whole is because demand is down over last year and the cost of a barrel of oil has come down considerably, right around the $90 mark," he said. "We are also seeing wholesale prices around $2.40 a gallon. With those drops, the price at the pump we are seeing is way down."

Barring any major obstructions to production, prices should stay around $3 through Thanksgiving, he added.

When he saw prices in his neighborhood at $3.37 a gallon, Robert Henderson said he drove from his home in Lebanon to fill up at the Sunoco station on Ohio 123 in Franklin, where a gallon cost $2.97.

"A 40-cent a gallon difference is worth driving over here for," he said. "I don't really save much by driving over here, but I ain't giving (Lebanon station owners) anything."

While there will be some disparity between prices, the fuel market is extremely competitive and most stations can't afford to stay at a higher price for long, Keyton said.

"If one station is at $3.40 and one down the road is at $2.95, I don't think many people are going to buy at the higher station," he said. "That will kill your business."