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How long will dirt-cheap oil prices last?

Depending on where you live in the U.S., you may be paying less than $2 a gallon for regular grade gasoline, a price many Americans until recently thought was as likely to reappear as rotary telephones.

According to AAA, the U.S. rang in the new year with a national average gas price of $1.99 a gallon, the lowest it's been since 2009. Those rock-bottom prices are of course attributable to the falling price of crude oil, which slid Thursday to a level not seen in more than a decade.

Prices for light, sweet crude for February delivery fell to as low as $32.10 a barrel in overnight trading, the lowest intraday level since 2003. By mid-morning Thursday, prices rebounded to around $34 a barrel in trading on the New York Mercantile Exchange.

Holiday travelers get early gift in cheaper gas prices

As oil prices continue to fall, some analysts have suggested that $20 a barrel could be a reality in the near term, said Stifel chief economist Lindsey Piegza in a note.

Despite falling prices and signs the global economy is slowing down, oil companies have kept production steady, seemingly ignoring the basic tenets of supply and demand. The slump in crude prices has taken a toll on the entire energy sector, spurring U.S. shale-oil producers to mothball rigs and energy producers to announce layoffs.

Many are also now questioning how long oil prices can remain below the $100 a barrel level that was once viewed as the new baseline.

With OPEC in disarray and rising uncertainty about China's economy, research firm Capital Economics revised its forecast for the price of Brent crude, the global benchmark, downward to $45 from $55 a barrel by the end of the year -- about $12 a barrel higher than its trading level on Thursday.

Some industry executives, including Royal Dutch Shell CEO Ben Van Beurden and BP chief Bob Dudley, have also predicted that the decline in oil prices could persist for several years.

Julian Jessop, Capital Economics global chief economist, expects Brent crude prices to climb to $60 a barrel by 2017 and $70 a barrel by 2020. But "the $100 price for a barrel of oil that many had assumed was the 'new normal' probably won't be seen again in the foreseeable future," he wrote in a note.

The sharp decline in oil prices since last summer hasn't delivered the kind of boost to U.S. consumer spending that many economists had expected. But it helps. Analysts estimate that every 1 cent reduction in prices at the pump puts about a billion dollars in consumers' pockets.

Some sectors are reaping the benefits. The falling price of gas in the U.S. is being credited for a surge in demand for new cars as automakers closed out 2015 with record sales. Many of those transactions involved gas-guzzling SUVs, depressing, albeit modestly, the recent fuel-economy gains made in the U.S. vehicle fleet.

The average fuel economy of vehicles sold in calendar year 2015 was 25.3 mpg, down 0.1 mpg from the value for the vehicles sold in 2014, according to the Transportation Research Institute at the University of Michigan.

The trend is disturbing to critics who worry that consumers have been lulled into a false sense that low oil prices will stick around long term, and will find that driving large, inefficient vehicles in a renewed era of expensive oil to be a financial hardship.

It's also potentially a setback for advocates who want to see passenger-vehicle fuel efficiency dramatically increase. Legislation signed into law in 2009, when Chrysler and General Motors (GM) were seeking federal bailouts, called on automakers to boost the fuel efficiency to an average 54.5 mpg by 2025. But with automakers making lots of money selling pickups, SUVs and large crossover vehicles, that target now seems under threat.

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