Lenon’s main business news

South Korea posted a current-account surplus for a second straight month in November, easing pressure on the won, the region's worst-performing currency this year.

The surplus widened to $2.06 billion from $1.67 billion in November 2007, the Bank of Korea said in Seoul today. A surplus means there are more U.S. dollars flowing into the country than going out, increasing demand for the local currency. The nation posted a record $4.75 billion excess in October.

The won climbed to 10-week high after the report. The currency has gained 21 percent since setting a decade low on Nov. 21 amid speculation the central bank bought it to help bolster balance sheets before year-end accounts are filed and after the government signed swap deals with the U.S., China and Japan, giving access to dollars.

“Things are looking better as we had a good surplus again last month,” said Chun Chong Woo, a senior economist at SC First Bank Korea Ltd. in Seoul. “It'll help stabilize the currency if this trend continues. The worst seems to be over for the won.”

A decline by the won earlier this year led to speculation that the government may have return to the International Monetary Fund for help 10 years after a bailout during the Asian financial crisis. President Lee Myung Bak said last week the economy may shrink in the first half of next year, which would mark the nation's first recession in a decade.

The Korean currency rose 0.6 percent to 1,257.75 per dollar at 11:09 a.m. in Seoul. The won's 26 percent this year makes it the region's worst performing currency. The Kospi stock index gained 1 payday cash loans.7 percent.

More Surpluses

South Korea may keep posting current-account surpluses in coming months as imports fall faster than exports amid a decline in oil costs, Yang Jae Ryong, a statistics official at the central bank, said in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income.

The nation's current account has been in deficit every month but three this year as higher oil prices and the weaker won drove up the cost of imported goods.

The surplus on traded goods narrowed to $994.6 million last month from $2.63 billion in October, today's report showed. The trade surplus was $2.72 billion in November 2007.

Total exports on a customs-cleared basis, which excludes ships, dropped 19 percent in November from a year earlier, compared with an 8 percent gain in October. Imports fell 14.9 percent compared with a 10.3 percent gain in October.

South Korea's income account, which tracks the flow of interest payments, investment income and wages, posted a surplus of $720.2 million last month.

The deficit on the services account, which measures the international flow of travel, transport costs and royalties, widened to $130 million from $54.8 million.

The capital account, a measure of total inflows and outflows of international investment, recorded a deficit of $12.14 billion last month, narrowing from October's shortfall of $24.83 billion.

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It looks like America may be getting a whole lot more energy efficient as part of any new stimulus plan.

But how exactly will that happen? While new light bulbs, insulation and air conditioners may play well with homeowners, will they actually put enough people to work to jumpstart the economy?

The energy-saving plan is expected as part of a stimulus package from lawmakers set for early January that could top $800 billion and include everything from tax breaks to road repairs.

Conservation is thought to be the first big energy component of President-elect Barack Obama’s long-term energy plan, for a couple of reasons.

First, it can be done relatively quickly using existing state and regional agencies.

Conservation is also essential if the country is to switch to cleaner, more renewable forms of electricity, since they can’t currently provide the sheer megawatts that fossil fuel or nuclear power can produce.

If a major conservation initiative is included in the stimulus package, it might look something like a plan being pushed by the electric utility industry and a handful of environmental groups.

Under that plan, the government would commit just over $30 billion toward making the nation energy efficient. The money would be spent as follows:

– $3 billion for home energy retrofits, which could include rebate checks for people who buy energy-efficient appliances like air conditioners and refrigerators.

– $3 billion for energy retrofits at public buildings, which may include hiring people to conduct energy audits and install so-called "smart-meters" that more efficiently allocate power.

– $3 billion to promote energy efficiency in commercial buildings, largely in the form of tax breaks for developers who build them.

– $3 billion for efficiency projects at schools.

– $3.5 billion to expand current state energy-efficiency programs.

– $5 billion more for states that pass stricter building-efficiency standards and restructure their utility conservation incentives.

– $6 billion for local governments to make power plants and transportation networks more efficient.

– $4 billion for things that include construction of a better electric grid, efficiency at military institutions, workforce training, additional smart meters and an expansion of the weatherization program to better insulate homes.

In the interest of time, no new agencies are planned. Instead, the money would likely be administered by existing agencies, be they state, federal or regional, or utilities with strong conservation departments.

All told, the program might drop the country’s energy consumption by half a percent each year for 20 years no teletrak payday loan. While that doesn’t sound like much, with the U.S. spending over $1 trillion on energy each year, the savings could top $5 billion a year, or over $100 billion in all.

"An economic recovery bill that includes significant investments in energy efficiency will not only create jobs immediately, but also and more importantly will bring American ingenuity and its ‘can-do’ spirit to a new, clean and sustainable energy future," said Kateri Callahan, president of the Alliance to Save Energy, when announcing the program last week.

There’s little doubt energy efficiency is something the country should invest in, and there’s little doubt it will save energy.

But should we borrow money for it and include it in a stimulus bill - a bill that’s designed to create jobs and get the economy back on track?

Plenty of people say yes.

The Alliance estimates their plan will directly create 190,000 jobs in short order.

The Associated General Contractors of America backs the plan, saying every $1 billion spent on infrastructure - energy efficiency included - nearly 30,000 jobs are created.

"Clearly, it will put construction workers back to work and put money in the economy," said Brian Turmail, a spokesman for the contractors’ association. "This is a tremendous opportunity."

But others see it as little more than a tremendous opportunity for waste.

"How on earth can this thing be administered without generating a lot of waste," Rudolph Penner, a senior fellow at the think tank the Urban Institute, said of the stimulus plan.

Beyond the potential for waste, critics generally argue that it takes too long for the projects to start up to have the desired effect, and that the economics simply don’t make sense.

Once the projects get going, they also say the projects are hard to stop and can then contribute to inflation, not to mention a ballooning debt once the economy recovers

On the energy part specifically, Penner said it would be hard to calculate who was conserving because of the incentive, and who would normally have spent money to conserve anyway.

"Some people would choose to insulate their homes anyway," he said. "For them, this would just be a windfall."

All news is bad news in real estate right now. Have you recently bought a house anyway? Send your story and photos to realstories@cnnmoney.com and you could be featured in an upcoming article. 

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Thai Prime Minister Abhisit Vejjajiva said the government will spend 300 billion baht ($8.6 billion), or about 3 percent of gross domestic product, to help counter a slump in Southeast Asia’s second-largest economy.

“The spending should start around March or April,” Abhisit told reporters today in Bangkok. “We had weak forecasts but we will try to achieve some growth.”

Abhisit, who this week became Thailand’s third premier in four months, is increasing spending amid growing protests by farmers disgruntled by tumbling commodity prices. Export growth is being stunted by a global recession, and tourism income dropped after demonstrators closed Bangkok’s main airports a month ago.

Thailand’s economy may contract in the first three months of 2009 after declining between 2 percent and 3 percent this quarter, according to the Finance Ministry. The last time the economy shrank two straight quarters, the technical definition of a recession, was in the six months ended March 1999.

“That 300 billion baht is a lot of money,” Pornthep Jubandhu, an economist at SCB Securities Ltd payday loans., said by telephone from Bangkok. “Usually, the more the merrier, but the government has to be careful about disbursing and spending.”

Finance Minister Korn Chatikavanij said Dec. 24 government spending may cause Thailand to run a budget deficit of as much as 400 billion baht in fiscal 2010. That compares with a proposed shortfall of 350 billion baht on the 1.84-trillion-baht budget for the fiscal year ending Sept. 30, 2009. Thailand’s public debt to gross domestic product ratio is “relatively low” at 35 percent, he said, providing some fiscal flexibility.

The benchmark stock index gained 0.6 percent to 447.37 as of 11:54 a.m. in Bangkok.

Abhisit will make a formal policy address to parliament on Dec. 29 and Dec. 30.

Finance Minister Korn said Dec. 23 the government may spend a further 80 billion baht on top of the 100 billion baht in additional funds for the current fiscal year approved by the former government last month.

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What’s good for General Motors may not ultimately be best for the global economy.

The Bush administration’s $13.4 billion rescue of GM and Chrysler is a fitting finish to a year in which governments around the world expanded their role in the economy and markets after three decades of retreat.

The intervention comes at what may prove to be a steep price. Future investment may be allocated less efficiently as risk-averse politicians make business decisions. Whenever banks decide to lend again, they are likely to find new capital requirements that will curb how freely they can do it. Interest rates may be pushed up by government borrowing to finance trillions of dollars of bailouts.

“We’re seeing a more statist world economy,” says Ken Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard University in Cambridge, Massachusetts. “That’s not good for growth in the longer run.”

It’s not good for stocks either, says Paola Sapienza, associate professor of finance at Northwestern University’s Kellogg School of Management. Slower economic growth means lower profits. Shares might also be hurt by investor uncertainty about the scope and timing of government intervention in the corporate sector.

“If the rules of the game are changing, people are reluctant to invest in the stock market,” Sapienza says.

Record Lows

The bond market will also be affected as it is forced to absorb ever bigger increases in government debt. While yields on Treasury securities touched record lows last week, they eventually “will go up significantly and dramatically” under pressure from added supply, says E. Craig Coats, co-head of fixed income at Keefe, Bruyette & Woods Inc. in New York.

The increase in the government’s role in the economy has been breathtaking. The U.S. looks set to rack up a budget deficit of at least $1 trillion this fiscal year, while the Federal Reserve has already increased its balance sheet by $1.4 trillion since last December. By way of comparison, U.S. gross domestic product last year was $13.8 trillion.

Winding back the intervention may not be easy, says Sapienza, who has studied the effect of government ownership on bank lending.

When Italy nationalized banks in 1933, “the architects who designed the system envisaged it as temporary,” she says. “It was in place until the end of the 1990s.” More recently, the Japanese government injected capital into banks to get them to lend to big corporations, keeping alive “the zombie companies that economists talk about,” she says.

Investors ‘Gambling’

Already, investors trying to decide where to put their money are “gambling very much on what they think the government will do, not what they think about the company,” Sapienza says. “That’s why there’s so much volatility.”

GM shares plunged as much as 37 percent Dec. 12 after the U.S. Senate failed to pass an emergency loan plan. The shares recovered after George W. Bush said his administration would consider funding a rescue with money already set aside for bank bailouts, then shot up 23 percent on Dec. 19 when he announced the emergency loans.

The auto-industry lifeline is just the latest in an extraordinary year of market interventions that have redefined capitalism. The U.S. government previously seized control of mortgage lenders Fannie Mae and Freddie Mac and insurer American International Group Inc. and took stakes in the nation’s largest banks.

‘Necessary Evil’

Government activism has become a “necessary evil” to help pull the global economy out of recession, says Marco Annunziata, chief economist at UniCredit MIB in London. Even Bush, who ran for the U.S. presidency espousing smaller government, agrees. He told a CNN interviewer last week he has “abandoned free-market principles to save the free-market system.”

Policy makers elsewhere extended their reach, too. The U.K. nationalized mortgage lenders Northern Rock Plc and Bradford & Bingley Plc. French President Nicolas Sarkozy created a 6 billion-euro ($8.7 billion) fund to invest in “strategic” firms. And the European Commission last week relaxed rules on state aid to businesses.

It isn’t inevitable that bigger government will hamstring free enterprise, says William Niskanen, chairman emeritus of the Cato Institute, a Washington research group that generally favors free markets over government solutions health insurance quotes. Niskanen predicts that government intervention will prove to be “selective and temporary,” not “a long-term trend.”

Shy Away From Lending

Still, greater government involvement will make businesses less likely to deploy capital in ways that spur growth and profits, says Eric Chaney, chief economist at AXA SA in Paris and a former official at the French finance ministry. Carmakers may be slower to innovate or cut costs, and financiers may shy away from lending to entrepreneurs.

“It’s the job of companies, not governments, to take risk and accept the consequences,” Chaney says. “There is no incentive for governments to take risk, so they won’t.”

The history of public aid to automakers highlights the threat, says Stuart Pearson, an analyst at Credit Suisse Group in London.

While the U.S. rescue of Chrysler in 1979 gave then-Chief Executive Officer Lee Iacocca time to streamline the company and restore profitability, it also sustained an outsized U.S. auto industry, leading to its current woes, Pearson says. The 1975 bailout of British Leyland Motor Corp. ended up costing U.K. taxpayers 11 billion pounds ($16.8 billion) and failed to keep successor MG Rover Group Ltd. from sinking into bankruptcy two decades later.

Help, Obstruction

“Government help has only been an obstruction to getting the car industry into a more economic shape,” Pearson says.

Back in 1953, when the industry was booming, GM Chief Executive Officer Charles Wilson famously observed: “For years I thought what was good for our country was good for General Motors and vice versa.” If the automakers’ importance has declined, so — until recently — had the government’s.

Just a dozen years ago, U.S. President Bill Clinton declared that “the era of big government is over.” Sarkozy won election last year promising a “rupture” from France’s history of heavy regulation; these days, the French president has changed his tune. “Laissez-faire, it is finished,” he declared last month.

Role of Government

Until recently, “investors could, broadly speaking, ignore the role of the government when thinking about markets” says Alex Patelis, chief international economist at Merrill Lynch & Co. in London. “This period is over.”

Regulation is back in style as policy makers seek to avoid a repeat of the financial crisis. Leaders from the Group of 20 nations are crafting a plan to require banks to maintain higher capital levels and disclose more about their holdings.

That likely means a lower “speed limit for growth,” as banks have less cash available to lend and invest, says Mohamed el-Erian, co-chief executive at Pacific Investment Management Co., the Newport Beach, California-based manager of the world’s biggest bond fund.

“There will be less lubrication in the form of credit creation,” he says.

Bailouts and economic-stimulus plans are also running up government borrowing. Economists at JPMorgan Chase & Co. estimate the budget deficits of developed economies will more than double next year to 6.3 percent of gross domestic product.

Higher Taxes

Bigger deficits, while necessary now, could spell trouble down the road if they lead to higher borrowing costs or prompt consumers to save more now on the assumption that bigger shortfalls will mean higher taxes later.

“We’ll end a financial crisis with a fiscal crisis,” says Vito Tanzi, former director of fiscal affairs at the IMF. “We’ll get out with very large public debt and very large public spending. That, for sure, will slow down the rate of growth for the next 10 years or so.”

While bigger government is the unavoidable result of dealing with the turmoil, “it makes all of us economists uncomfortable seeing the government doing all these extraordinary things,” says Barry Eichengreen, an economics professor at the University of California at Berkeley.

On the other hand, he says, “I would feel even more uncomfortable if they weren’t doing them.”

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Ford Motor may not be facing an immediate cash crisis like its U.S. rivals, but the company primarily looks good only by comparison to General Motors and Chrysler LLC.

On Friday, President Bush announced a rescue plan for GM (GM, Fortune 500) and Chrysler that will make $13.4 billion in federal loans available almost immediately. Both automakers said they needed the funds to avoid bankruptcy.

Ford (F, Fortune 500), on the other hand, had cash reserves of nearly $19 billion at the end of the third quarter, which the company says should allow it to weather the current turmoil facing the industry. It also has access to a $10 billion bank line of credit.

Ford requested $9 billion as part of the $34 billion loan package to the Big Three that was defeated in the Senate last week. But Ford has repeatedly maintained that it only wanted access to the funds in case trouble in the auto market lingered longer than it expected.

The company had the foresight to borrow against its property and assets two years ago, a move that seemed risky at the time but now appears to be brilliant.

However, it’s not as if Ford’s cash cushion can last forever. Ford’s automotive operations burned through $7.7 billion in cash during the third quarter, nearly a billion more than GM, even though GM’s auto operations are larger.

As such, some leading industry experts say that the challenges facing GM and Chrysler still threaten Ford.

"I don’t know if their restructuring has been any more dramatic than the others," said Bob Schnorbus, chief economist with consultant J.D. Power & Associates. "It’s the way they financed that restructuring that has put them in a better position."

To be sure, Ford has been able to shed non-core brands such as Land Rover, Jaguar and Aston-Martin and sell its controlling stake in Mazda. It is looking to also sell Volvo.

It has also slashed hourly staff and capacity in the past few years, closing 17 plants and eliminating 56,000 jobs since CEO Alan Mulally joined the company in September 2006. Still, more cuts are likely necessary according to Bob Schulz, chief automotive credit analyst for Standard & Poor’s.

"They’ve been taking out cost and shrinking for years, but market share has always come down faster," said Schulz.

Ford is also saddled with basically the same labor contract with the United Auto Workers union as GM and Chrysler. While the 2007 labor pacts should narrow the gap between the U.S. automakers and the nonunion U.S. plants operated by Asian automakers such as Toyota Motor (TM) and Honda (HMC) by 2010, it won’t be eliminated quick pay day loan.

Shelly Lombard, the automotive credit analyst for Gimme Credit, said Ford was widely considered to be in the weakest position among U.S. automakers when it arranged for the financing it needed in 2006. She said that greater need forced it to line up financing when banks were still lending.

"People say it’s better to be lucky than good," she said. "I’m not saying they are not good to line up the financing when they did, but you have to attribute it to luck."

Lombard also questioned whether Ford will be able to hit all the targets it lays out in the turnaround plan it sent to Congress earlier this month when it, GM and Chrysler were pleading their case to legislators for a bailout.

For example, Ford expects industrywide sales to improve in 2009 from current levels, which are at a 26-year low. Ford estimates car and light truck sales of a little more than 12 million in 2009.

But that is more bullish than the forecasts of GM and Chrysler, as well as independent estimates from firms like J.D. Power, which expects 2009 sales of only 11.4 million vehicles.

What’s more, the ability of Ford to meet its sales targets rests with many factors outside its control.

"The volume of new vehicle sales is going to be determined by the economy first and foremost," said J.D. Power’s Schnorbus. "That’s where there is the most concern and least visibility."

Ford’s plans are also centered around shifting its focus to smaller, more fuel efficient cars, away from pickups and SUVs. Its plans also focus around a new generation of electric and hybrid-electric vehicles in the next few years, vehicles that are unlikely to make money in the short-term.

Since it first announced that shift in focus, gas and oil prices have plunged, which could limit demand for the vehicles it is now counting on to lead its turnaround.

And even if small car sales continue to gain market share, those vehicles have far lower prices than the light trucks that used to drive Ford’s profits.

Ford insists that its plans to bring in more fuel efficient models from Europe should help it finally start making money on small car models. But analysts say that will probably be the toughest challenge of all in its turnaround plan. Their ability to achieve that goal will determine the company’s long term success more than anything else, said Lombard.

"If they don’t do that, they’re not going to live," she said. 

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Federal Reserve Chairman Ben Bernanke may eventually be hailed as an economic Santa Claus if the Fed’s dramatic rate cut helps bring an end to this recession.

But if you’re an investor relying on a fixed income, Bernanke is The Grinch Who Stole Your Yield. Now that interest rates are effectively at zero, you won’t get much from owning Treasurys. The U.S. 10-year note sports a puny yield of 2.19%, for example.

With many experts predicting rocky times through 2009, it’s more important than ever for investors to own stocks and bonds that offer decent yields and a margin of safety.

One way to do that is with stocks that pay dividends. Many blue-chip stocks have yields well north of 5%, companies such as AT&T (T, Fortune 500), Verizon (VZ, Fortune 500) and Pfizer (PFE, Fortune 500).

Sure, some of these so-called "widow and orphan" stocks may not seem terribly exciting. But you know what? Earning 5% with a boring blue chip is better than losing all your money with Bernie Madoff.

"Many investors are concerned the market may be flat for many years. We feel that’s unlikely, but even if that were the case, earning a 5% yield might not be that bad," said Steve Neimeth, manager of the SunAmerica Value fund. "Even if the market is flat for two to three years, investors could get paid to wait for a recovery."

Neimeth, who owns Verizon, Pfizer and AT&T in his fund, also likes food giant Kraft (KFT, Fortune 500), which yields about 4.3%.

Of course, it’s always worth asking if a dividend-paying company is financially healthy enough to keep paying out.

Bank stocks’ high yields looked attractive earlier this year, but many institutions have since slashed their dividends - some near a penny per share - because of the credit crunch.

And one fund manager said that any bank asking the Treasury Department for capital is irresponsible if it continues paying dividends.

"Banks should not be paying any dividends if they are going to the government for money," said Don Wordell, manager of the RidgeWorth Mid-Cap Value fund.

Instead, Wordell said he’s focusing on technology companies that he believes are healthy enough to keep paying their dividends. Two of his top holdings are Intersil (ISIL), a semiconductor company with a 5% yield and no debt, and Harris Corp (HRS)., which makes radio communications equipment and has a yield of 2.2%

Paul Alan Davis, co-manager of the Schwab Dividend Equity fund, sees good opportunities in the beaten-down energy sector, including natural gas company Williams Companies (WMB, Fortune 500) and oil firms Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and Occidental Petroleum (OXY, Fortune 500). These stocks all pay yields ranging from about 2% to 3.3%.

These yields may not sound that lucrative, but Davis said it’s more important to focus on companies with the potential to grow their dividends, not just those with super-high yields no faxing pay day loans. After all, the yield is the dividend divided by the stock price, so an extremely high yield could actually be a warning sign.

Dividend-paying stocks aren’t the only way for investors to profit from a steady income stream. Sabur Moini, manager of the Payden High Income fund, has found plenty of opportunities in the world of high-yield corporate bonds.

Yes, many high-yield bonds are inherently risky. But Moini said there are values now because the market is pricing in higher default rates than he thinks are likely next year.

"Clearly we are in a recession and 2009 won’t be good," he said. "But a number of companies that raised money in 2005 and 2006 are fine and won’t have to refinance or have debt coming in due in the next year."

The key, Moini said, is to focus on companies in defensive industries that generate strong cash flow.

"The bonds we own have attractive yields and the companies will be around for the next few years. We are staying away from autos, homebuilders and more cyclical companies," he said.

Some of Moini’s top investments are high-yield bonds of cable company Cablevision (CVC, Fortune 500), satellite TV firm DirecTV (DTV, Fortune 500), hospital operator HCA, which was taken private in 2006, and privately held California supermarket chain Stater Brothers. The bonds for all four companies yield more than 10%

Jeffrey Saut, chief investment strategist for Raymond James Financial, said he’s looking more closely at high-yield investments and finding the best values in funds that invest in municipal bonds.

Even though the credit crisis has many state and local governments dealing with major budget problems, Saut said the pessimism in the muni bond world is overdone.

"Unless all municipalities go bankrupt, there are some funds trading at big discounts with the potential for stock-like returns," he said.

Three funds he recommends are the Nuveen Insured Dividend Advantage Municipal (NVG) fund, which yields about 7.5%, the BlackRock MuniHoldings Insured Fund II (MUE), which yields almost 8%, and the Lord Abbett Bond Debenture fund, which yields nearly 9%.

Rob Arnott, chairman of Research Affiliates, a Newport Beach, Calif.-based money management firm with about $30 billion in assets under management, agreed that investors should look to bonds for bargains.

He said that while the stock market is probably accurately factoring in the likelihood of a long recession, bond investors are much gloomier and are pricing in another Great Depression.

"The out-of-mainstream parts of the bond market are wildly attractive. Why would anyone hold cash yielding zero when they can get double-digit yields?" asked Arnott, whose firm is the subadviser for the PIMCO All Asset fund.  

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A federal judge Monday issued an order that may help investors swindled by what appears to be the largest Ponzi scheme in history recover some of their money.

The order, which was signed by Judge Louis Stanton in the U.S. District Court for the Southern District of New York, said customers of Bernard Madoff Investment Securities LLC are "in need of the protection" under the Securities Investor Protection Act of 1970.

SIPA created the Securities Investor Protection Corporation, a nonprofit that maintains a fund aimed at protecting investor funds from being mishandled if their broker defaults.

SIPC differs from the Federal Deposit Insurance Corporation, which insures all depositorsof failed banks against loss up to a certain dollar limit. SIPC does not bail out investors but rather replaces "missing stocks and other securities," when a brokerage is closed payday loans for people with bad credit. SIPC typically will go to a federal judge and request a trustee be appointed to liquidate the firm. (Click here to read more)

SIPC has a reserve of slightly more than $1 billion, according to its Web site

As part of his ruling, the judge named New York lawyer Irving Picard as trustee for the liquidation of the business and ordered that the proceedings be moved to bankruptcy court.

Federal prosecutors have charged Madoff for securities fraud that could result in huge losses at financial firms worldwide, charities and individual investors. The total cost of the fraud has been estimated at nearly $3 billion. 

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New York on Friday joined the other 47 states in the contiguous United States with an average gasoline price below $2 a gallon, according to a motorist group’s survey, leaving just Alaska and Hawaii above the milestone.

Nationwide, gas prices fell 0.8 cent Friday to a national average of $1.656 a gallon, according to the survey of credit card swipes conducted for AAA.

Gas prices in New York state slipped to $1.99 a gallon from $2.011 on Thursday, according to AAA.

Prices are highest in Alaska, at an average of $2.719 a gallon, and Hawaii, at $2.489. Gas was cheapest in Missouri, the only state where gas was below $1.437 a gallon on average.

Of U.S. urban areas, Kansas City, Mo. had the cheapest average gas prices at $1.324 a gallon, while the most expensive average was in Anchorage, Alaska at $2.454 a gallon on average, according to GasBuddy.com, which lets motorists post and view their local gas prices online.

The national average gas price has fallen $2.199 a gallon over the past 86 days, according to AAA. Prices are now more than $2.45, or 59.7%, below the record-high average of $4.114 a gallon reported on July 17.

Gas has been selling at the lowest average price since February 2004, according to AAA data.

But prices may be starting to bottom out, according to Jason Toews, co-founder of GasBuddy in Minneapolis.

Lower gas prices are starting to spur demand in many areas, which could see gas prices popping back up again when the spring and summer driving season hits next year, according to Toews.

"Enjoy the gas prices while they’re here," he said.

Since July, the price of gasoline has fallen along with the price of crude oil, gas’s main ingredient. Crude has fallen more than $100 a barrel since July as investors worried that the U easy payday loans.S. economy was consuming less fuel.

However the decline in the price of crude may be setting us up for a gas price "super spike" in two to four years, said Toews.

"A lot of oil fields are not economical at these lower prices," he said.

As crude prices have fallen, oil companies have cut back on exploration, and shut down production at expensive operations like the oil sands in Western Canada.

"Once demand comes back, it will make supply even more tight," said Toews.

And the greater the current recession is, the greater price spike we may see in the future, since the lower oil prices are, the more oil companies cut back, he added.

Diesel: The price of diesel fuel, which is used in most trucks and commercial vehicles, also continued to slide.

The price of diesel dropped 1.9 cents Friday to a national average of $2.575 a gallon, according to the AAA survey.

Diesel prices have fallen more than $2 a gallon since hitting a record high of $4.845 on July 17.

Ethanol: As falling demand pulled down gasoline and diesel prices, the price of E85, an 85% ethanol blend made primarily from corn, rose 0.8 cent to $1.518 a gallon on average, according to AAA.

E85 can be used in place of regular gas in specially configured "flex-fuel" vehicles, but it is not readily available in some states.

The AAA figures are state-wide averages based on credit card swipes at up to 100,000 service stations across the nation. Individual drivers may see lower fuel prices in different areas of each state. 

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Federal Reserve Chairman Ben Bernanke says he would be reluctant to use the central bank’s emergency lending program to help struggling U.S. auto companies.

In a letter to Senate Banking Committee Chairman Christopher Dodd, D-Conn., Bernanke wrote that any decision about whether to provide financial aid to Detroit is best left to Congress.

Congress and the White House are pushing to clear the final obstacles to a $15 billion bailout of the auto industry, seeking agreement by the end of the day followed by swift passage classic car insurance. 

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Oil prices rebounded from a nearly 4-year low Monday as U.S. automakers neared a deal that would keep them out of bankruptcy and President-elect Barack Obama pledged to stimulate the economy of the world’s largest oil consumer.

U.S. crude for January delivery rose $2.90 to settle at $43.71 a barrel after settling at $40.81 Friday, the lowest close since Dec. 10, 2004.

Congressional Democrats and the White House reached a tentative agreement late Friday that could keep troubled automakers out of bankruptcy court through March, and prevent the disintegration of a large section of the U.S. economy, according to congressional sources.

Government support for the auto industry could certainly help, but "it’s a temporary Band-Aid," said Phil Flynn, senior market analyst with Alaron Trading in Chicago.

Oil prices will be hard pressed to turn significantly higher unless they can rise back above $45.90 a barrel, cautioned Flynn.

In total, the U.S. auto industry employs about 2 million people nationwide, according to the Center for Automotive Research, which includes workers at General Motors (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler, as well as dealers and parts manufacturers.

As the economy falters, consumers and businesses use less petroleum-based fuel, which drives down the price of oil.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., issued statements this weekend that they would call the lame duck Congress back to Washington to vote on backing the auto industry.

"The U.S. auto industry is a critical part of our economy and we are encouraged by Speaker Pelosi’s statement that Congress is expected to act next week," said Ford in a statement.

Concern about the waning worldwide economy’s effect on oil demand has driven prices down more than $100 a barrel since hitting a record $147.27 this summer.

U.S. stimulus: In the U.S., Obama said his administration would ramp up spending on infrastructure, energy programs and school construction projects to create jobs and stimulate the economy.

"We understand that we’ve got to provide a blood infusion to the patient right now to make sure that the patient is stabilized fast pay day loan. And that means that we can’t worry short term about the deficit," he said in an appearance on NBC’s "Meet the Press."

The possibility of infrastructure spending in the U.S., along with a steep discount in crude futures, may set the stage for a possible turnaround in 2009, according to James Cordier, founder of brokerage OptionSellers.com.

"There’s a bit of light shining through the cracks," said Cordier, who believes a fair price for crude is around $50 a barrel.

Global stimulus: India, one of the world’s rapidly expanding economies, pledged Sunday to provide an additional $4 billion on infrastructure, tax cuts and other stimulus measures.

And in China, the world’s second largest oil consumer, leaders began weighing plans to expand a stimulus package, already worth about $586 billion, in order to protect the country from the global slowdown.

There is some fear that the global economic slowdown is spreading to Asia. Investors had long viewed the economies of China and India as untouchable by a U.S. recession. "The fact that they even have to talk about stimulus at this point is bearish in a weird way," said Flynn.

Possible OPEC cuts: Oil’s rapid decline in price since July has been a major concern for countries that rely on oil profits, and December could see some large cuts in production.

The Organization of Petroleum Exporting Countries, an international trade cartel whose members produce about 40% of the world’s oil, plans to meet next Wednesday in Algeria to discuss the problem.

The oil markets should prepare for a "severe" cut in production levels, according to OPEC President Chakib Khelil in an interview with The Associated Press.

Khelil did not say how much the organization would cut, but analysts estimate about 2 million barrels per day.

The organization already pledged to cut 1.5 million barrels per day at an emergency meeting in October. 

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