The average diesel price in the U.S. fell 20 cents to $3.08 per gal. for the week of Nov. 3, falling more than 21 cents beneath the price one year ago, according to data from the Energy Information Administration—a figure that would have been unspeakable in July when prices were nearing $5 a gal.

After hitting an all-time high on July 14 when prices reached $4.76 per gal., diesel prices slowly started to creep towards the $4 mark before falling 87 cents over the past five weeks. The average diesel price was $3.30 on Nov. 5, 2007.

Locally, prices are highest in New England, averaging $3.42 per gallon, the only region where prices are higher than they were one year ago. The lowest prices are in the Midwest region, where prices average $3.02. However, the biggest difference from 2007 prices is on the West Coast, where the $3.05 average is 46 cents cheaper than it was a year ago.

Crude oil prices have dropped from a high-water mark of $147.27 on July 11 to $64.95 today, according to the Associated Press, falling more than 32% in October despite a 1.5-million barrel production cut by the Organization of the Petroleum Exporting Countries (OPEC).

“I didn’t think we’d get this low this fast,” Denton Cinquegrana, markets editor for the Oil Price Information Service (OPIS), told FleetOwner, adding that crude oil prices could easily reach the fifties or lower sixties in the near future.

According to Cinquegrana, driving habits have changed somewhat, but the biggest reason for the drop in price is the weakness of the economy, as consumers have used money for food and other necessities instead of on fuel.

The economy continues to remain weak. The Institute for Supply Management’s (ISM) monthly Report on Business PMI index indicated that manufacturing sector economic activity failed to grow in October for the third consecutive month, while the overall economy failed to grow for the first time in 83 months.

"The PMI indicates a significantly faster rate of decline in manufacturing when comparing October to September,” said Norbert J. Ore, chair of ISM’s Manufacturing Business Survey Committee. “It appears that manufacturing is experiencing significant demand destruction as a result of recent events, with members indicating challenges associated with the financial crisis, interruptions from the Gulf hurricane, and the lagging impact from higher oil prices. This is the lowest level for the PMI since September 1982 when it registered 38.8%. In this report, we see inflationary pressures dissolving as the Prices Index fell to 37%, the lowest since December 2001 when it registered 33.2%. Export orders also contracted for the first time following 70 months of growth."

Weakness in the overall economy could be either good or bad for fuel prices. The best case scenario, Cinquegrana said, is that continued pressure on the market will keep crude oil in the $50 to $60 range for the foreseeable future, but he warned that if the economy continues to weaken, goods simply won’t move, and it appears that it will be a lean holiday season in 2008.

The worst case would be a rebound of oil prices while the economy stays stagnant or begins to decline. Cinquegrana said his best estimate is that prices will continue to go down, but far more slowly than they have been the past few weeks.