For the past year, rising oil prices have taken a toll on the global economy, driving up fuel and food costs, punishing airlines and automakers, and ripping a large hole in people's pockets.

But lately, nearly lost amid the chaos in the markets, oil prices have been dropping sharply from the triple-digit peak reached in July. If that trend continues, as many analysts expect, it will put billions of dollars back into consumers' wallets and provide badly needed support for a battered economy.

Ben Bernanke, the chairman of the U.S. Federal Reserve, pointed to the drop in energy prices as "a positive note" in recent testimony to Congress, even as he warned of the many other stresses facing the economy.

Oil has been volatile in recent weeks, bobbing from $91 to $120 a barrel amid wild swings in the markets. But with oil demand falling in most Western countries and growth weakening in some booming Asian economies, the trend is down. Crude oil futures traded at $93.45 a barrel in electronic trading on the New York Mercantile Exchange during Asian business hours Friday.

While consumers worldwide welcome the decline, which will reduce the $1.3 billion daily oil import bill for the United States, for example, oil producers are reacting warily.

Mexico said it might have to cut its budget next year as petroleum revenue dropped. Countries like Russia and Venezuela, which have been riding a wave of energy-fueled nationalism, could be required to scale back their ambitions, and energy projects that require enormous financing could be delayed.

These difficulties could prompt the Organization of Petroleum Exporting Countries to step in forcefully to stem the slide in prices, analysts said. Saudi Arabia, the oil cartel's most powerful member, has signaled that it wants to see oil fall below $100 to bolster the world economy, but it is unclear how low the Saudis and other producers will let prices fall.

Whatever OPEC tries to do, a growing number of experts say they believe that a combination of weaker global growth and slumping demand is likely to keep pushing oil prices down in coming months.

Merrill Lynch analysts said Thursday that oil prices could fall as low as $50 a barrel in a global recession. Lawrence Eagles, an oil analyst for JPMorgan Chase, said, "This is the weakest fundamental situation we've had since 2002."

Oil prices still remain high by historical standards. Many businesses had not managed to raise their prices enough to compensate for the summer oil spike to more than $145 a barrel, and they say the high prices are still causing problems.

"We get excited when prices break below $100 a barrel, but we are still in a high feedstock and hydrocarbon environment," said Rich Wells, the vice president for energy at Dow Chemical.

Automakers have appealed for U.S. government aid as consumers shun their gas guzzlers, a problem lately worsened by a credit squeeze for potential car buyers. Ford Motor said this week that its U.S. sales had dropped 34 percent in September from a year earlier. Other automakers, like General Motors and Toyota, also reported sharp declines in sales.

Rising oil costs have been a big reason that the global airline industry has lost money in all but one year since 2000. Fuel costs amounted to 14 percent of airlines' expenses in 2000 and are forecast to reach 40 percent next year, according to the International Air Transport Association.

"Our industry is like Sisyphus," Giovanni Bisignani, the association chairman, told an industry conference in Istanbul this summer. "After a long uphill journey, a giant boulder of bad news is driving us back down."

A sustained drop in oil prices could lead to a new wave of mergers in the energy industry. Given the sharp increase in prices in recent years for everything from drill rigs to steel pipes, costs in the industry have risen sharply. The cost of adding oil production is now $70 to $90 a barrel, according to JPMorgan and other analysts.

Any drop below that range may curb investment in new oil supplies. Already, some producers are feeling the pinch. Petro- Canada, for example, signaled recently that the cost of developing oil sands in Canada would not be economical at prices below $100 a barrel.

"Prices are still searching for true value and no one is quite sure what that is," said Tom Bentz, an energy analyst at BNP Paribas in New York. "A lot will depend on how the global economic picture will shape up. We still have a world that is a scary place to live in."

Originally published by The New York Times Media Group.

(c) 2008 International Herald Tribune. Provided by ProQuest LLC. All rights Reserved.