$3.77 gas doesn't seem so bad now, does it?

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By HILARY KINDSCHUH / Lincoln Journal Star

When gas prices hit $4.09 a gallon, Teresa Porter was ready to quit driving and stay home.

“I try to make one trip to the store a week instead of a couple or three … I make the kids walk,” said Porter, 42, who commutes from Lincoln to Omaha.

In July, average gas prices in Lincoln reached a record high of $4.16 a gallon, said Rose White, spokeswoman for AAA Nebraska.

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Now drivers are seeing relief — but they’re still paying more than they were a year ago.

Gas prices have fallen four straight weeks for the first time since December, and national prices are off 5.9 percent from their July high.

Crude oil prices settled at $119.17 a barrel on the New York Mercantile Exchange Tuesday after dipping to $118, the lowest since May 5. Crude has fallen $28, or 19 percent, since reaching a trading high of $147.27 July 11.

On the consumer end, regular unleaded gas in Lincoln cost an average of $3.77 a gallon Tuesday, White said.

That means people are seeing a difference of about 39 cents a gallon — which would save them about $6 to fill a 15-gallon tank.

Porter has noticed a difference.

“I’m saving at least $20 a week,” she said.

But even with the decline, local gas prices are still about 80 cents a gallon higher than a year ago. And nationally, prices are about $1.20 a gallon higher than last year.

Also weighing on oil prices is a report by the Commerce Department that consumer spending fell in June as shoppers dealt with higher prices for gas, food and other items.

That fed investor belief that a U.S. economic slowdown is forcing Americans to cut back on energy use.

“The market psychology has finally shifted,” said Stephen Schork, an analyst and trader in Villanova, Pa., adding that “$4-a-gallon gasoline has clearly killed demand.”

Although gas prices have dropped, they have not kept up with oil’s steep descent, suggesting struggling filling stations are still saddled with gas bought when crude prices were higher.

“They still have expensive gas to feed into the system, so they’re reluctant to drop prices,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. “Prices never come down as fast as they go up.”

And some analysts say oil has the potential to jump back up.

There are many factors that could keep oil from descending further, including political tensions in Nigeria and the Middle East, the potential for a hurricane along the Gulf Coast and global demand that is still growing — just not at the same pace it had been.

Even with oil’s uncertain future, Americans are surely feeling relief at the pump.

“I think it has to do with expectations,” said Ravi Sohi, marketing professor at the University of Nebraska-Lincoln.

People have come to expect high gas prices topping $4 a gallon, Sohi said.

“When they measure the price against what they’ve come to expect, when it’s lower than expected they feel good about it,” he said.

Reach Hilary Kindschuh at 473-7120 or hkindschuh@journalstar.com. The Associated Press contributed to this article.