Deflation is alive and well on street corners across the country. The average price for retail gasoline will descend below $2.15 gal this weekend, and if the truth be know, Americans will fuel up for the Thanksgiving holiday at about half the price they paid in early July.

   My estimate is that for the rest of November, the daily U.S. gasoline bill will be about $750-million (per day) cheaper than it was in the first half of July. In rough terms, the expense will be about $800-million per diem, compared with about $1.55-billion on each day in early July.

   There is no precedent for this since records for petroleum prices have been kept. The average state, federal, and local tax load is about 45cts gal across the country, so it’s difficult for prices to double or be halved in any given year, thanks to that constant which can offset dramatic wholesale moves.

   Let me flavor the unprecedented nature of the last 120 days with a personal note. I celebrated my birthday Wednesday. I am older than Oprah, Kathleen Turner, Billy Bob Thornton, and Sinbad (the comic .. . not the storybook character!) and approximately the same age as Pierce Brosnan, John Edwards, and Chaka Khan.  I am now eligible to join The Villages—Florida’s Friendliest Retirement Hometown (www.thevillages.com).

   For those of you who TIVO through the commercials, The Villages is the name of the development that constantly advertises on northern TV, and shows spry 55-70 year olds engaged in shotputting, canoeing, tennis, and softball.

   I believe I can be a five tool player in softball there, provided that one of the tools is hair.

    Okay, I digressed.  The point related to my birthday is this: The first 53 years and eleven months of my life produced crude oil prices that varied from less than $1 bbl in the Sputnik years, to the first crude close of over $92 bbl (October 31, 2007).  In the last 120 days, I have witnessed a drop from a $147.27 bbl crude price on July 11 to an intraday price this Thursday of $54.67 bbl. So the peak-to-trough trip in the last four months has covered $92.60 bbl.

Some Reasonable Predictions . . .

-         The odds of crude dropping below $50 bbl are probably about 50-50, and if that occurs it generally happens between Veterans’ Day and Valentines’ Day. You might think a great distance of time separates us from a sub-$50 bbl crude number, but we saw $49.90 bbl in late January 2007.

-         We did not, however, see gasoline then as weak as it is these days. Gasoline sold by U.S. refiners at the Gulf Coast dipped as low as $51 bbl (about $1.21 gal) this week, and there is little incentive to make fuel when one sells it for less than the cost of the raw material going into the plant.

-         Retail prices this week are as low as they’ve been since February 5, 2007. Once we drop below $2.15 gal, it will represent the cheapest nationwide number since December 7, 2005. If we drop below $2.00 gal (this is a borderline consideration that falls between possible and probable), it would represent the first such visit to that territory since March 9, 2005.

-         Pump prices for diesel fuel will soon drop below $3.00 gal nationally. This is no small event, but diesel continues to fetch about 50cts gal more than unleaded regular in global wholesale markets and that is a stretch. This column has emphasized that diesel is the transportation fuel of choice on a global basis (trumping gasoline) but one might think that global demand pains will be more drastically felt for this cut of the barrel shortly.

Nobody Asked Me But . . .

-         Refiners have been big losers thanks to the gasoline price decline, but the biggest losers may be our good friends - - the bankers. When retail gasoline fetched $4.11 gal in July, a company like American Express might typically collect 13.35cts gal (based on a 3.25% processing charge) on every gallon of fuel purchased on that Amex card. That same processing charge translates into less than 7cts gal at current number. This illustrates the point that some companies have a vested interest in inflation, and explains perhaps why American Express has petitioned to become a bank holding company and become eligible for federal bailout money. Don’t leave home without it.

-         The folly of putting a price on what it takes for companies to bring a barrel of crude to market has been illustrated many times in the last few months. The “average” price of one of the 87-million barrels per day of crude that get processed by refiners is a mystery. It can vary from a few dollars per barrel for older mature and incredibly successful fields to something closer to $60-$70 bbl in the tar sands or other harsh and brutal landscapes.

-         There are many very capable and dedicated people at the Energy Information Administration (EIA). But EIA forecast an average 2009 crude price of $126 bbl last June, and then revised it lower to $112 bbl a month or so ago. This week, they revised it lower to $63 bbl. There is futility in issuing a long term forecast on something that is mostly dependent on human behavior. Be happy that EIA’s precision instruments are not being used to put siding on your house.

-         It’s nice to see Venezuelan President Hugo Chavez mellowing now that his arch-enemy George Bush is in his final months. Chavez should be far less mischievous with Venezuelan crude selling for about $50 bbl, but he’s still spewing rhetoric like that gusher in There Will Be Blood.  Wire services this week saw him weigh in on President Elect Obama, and he recommended that “he (Obama) take his place in history and forget imperialism, the U.S. desire to dominate the world, and its desire to abuse people, bomb republics and nations, and topple presidents.”  He couldn’t leave it at that, ungraciously telling President Bush “Shut up, Bush . .. You have nothing left to say.”

A Final Note . . .

    As if celebrating a middle aged birthday wasn’t damaging enough, I did a “phoner” with Fox Business News’ Dagen McDowell yesterday and she introduced me as “the man that knows more about ‘gas’ than anyone . . . .”

    I’m hoping that the endorsement tie-ins with Beano, Maalox or Gas-X might be the silver lining in that introduction. In the meantime, I’ll stay away from the burritos.