Gasoline prices have fallen $1 in a month and more than $2 since the all-time high in June. Californians are collectively saving billions at the pump, cash that would have generated fresh legs for the economy in better times.

But motorists aren't dancing.

The effect of cheaper gas is being overwhelmed by the housing crash and the financial crisis. Even a stunning decline in energy prices won't be enough to steer the state and nation out of recession.

"The problem is, this is coming too late to prevent the carnage that's already occurred," said energy economist James Hamilton of the University of California, San Diego. "It's a boost to the economy. I don't know if it's enough to offset the negative dynamics that are in play."

That doesn't mean energy prices don't matter anymore. Cheaper gas does put more money into motorists' pockets at a time of sagging consumer spending.

"You have to wonder how much worse it would be," said Howard Roth, chief economist at the California Department of Finance.

AAA said gas fell another penny in Sacramento on Monday to $2.24 a gallon, the cheapest it's been since May 2004. That's a $1.10 decline in a month. Gas in Sacramento is half of what it was June 17, when it hit a record $4.57.

If prices hold, that translates into savings of more than $2.5 billion a month across the state.

But that's more than offset by the fallout from the housing crash. So-called "equity extractions" in California – the dollars generated by home equity loans, refinancing or outright sales – have fallen by $41 billion this year, according to researcher MDA DataQuick.

Not surprisingly, Californians aren't suddenly reopening their wallets.

"We're doing the same things that we did when gas was almost $5," said Marty Walter of Orangevale during a stop at a Union 76 station in Roseville on Monday. "We're getting into the pattern of saving – let's not do anything unless we have to."

Cori Brown, pumping $15 worth of fuel into her 1996 Ford Explorer at a Chevron station on Richards Boulevard, feels the pinch. Until food and rent decline as much as gas, "it doesn't make a whole lot of difference," she said. "This is a depression, and I'm living through it."

Some, however, couldn't resist taking their old war horses for a spin. Mike McClera hadn't driven his '78 Ford Econoline van much lately but took delight in gassing up at $1.95 a gallon at the Bonfare station on Broadway in Sacramento.

"I paid almost $4.80 a gallon on vacation last summer, so I'm maxing it out," he said.

Still, for most consumers, caution is the word – especially with major purchases. New-car sales in California plunged 30 percent in August, the latest data available, and a quick turnaround isn't likely.

"It's not just cars, it's other big-ticket items, like jewelry," said Art Spinella, who follows the nation's auto industry for CNW Research of Bandon, Ore. "As for cars, it's not just California. But California is the worst."

With Detroit pressing the federal government for a bailout, car sales in the Sacramento area have gotten so bad that seven dealerships have folded this year. The latest was Saturn of Elk Grove on Friday.

Statewide unemployment has risen to 7.7 percent as of September; Sacramento-area unemployment is at 7.4 percent. Both are the highest in 12 years. October numbers will be released Friday.

A global economic downturn, of course, is what brought about the crash in energy prices. Crude oil has lost more than half its value since peaking in early July.

"Certainly it is the silver lining in all of the bad news that we've gotten," said Severin Borenstein, director of the UC Energy Institute in Berkeley. "The implosion of the world economy is the main driver."

Countries such as India and China, whose hothouse economies had increased the worldwide demand for fuel, are slowing down. On Monday Japan said it's in a recession, too, sending oil down another $2.11 a barrel, to $55.49, on the New York Mercantile Exchange.

All things being equal, a $2.11 decline should mean a 5-cent fall in retail gas.

AAA said retail prices should keep falling through December. Michael Geeser, a spokesman for AAA of Northern California and Nevada, said that will bump up Thanksgiving travel.

"I think we're going to see more travel than we previously would have, had gas prices remained high," he said.

After months of fuel surcharges, air travel is beginning to moderate. Average fares fell $16 in the three weeks that ended Nov. 5, according to Travelocity.com.

Still, the Air Transport Association said passenger traffic over Thanksgiving will decline 10 percent from a year ago.

Some businesses are finding reason for cheer. Mark Bonney, co-owner of Bonney Plumbing of Sacramento, figures to save thousands in fuel costs on his 28-vehicle fleet.

"This is good for the consumer and this is good for us," he said.

But long-haul truckers said the decline in fuel doesn't make up for the drop-off in business.

"It helps, but it doesn't completely compensate," said Jerry Farr, a trucker from Idaho who was filling up at the Sacramento 49er Travel Plaza off Interstate 80 in Natomas. "You're still behind the ball."

AAA's Geeser said prices are likely to move back up starting in late January, when California refiners begin producing costlier, summer-blend gas required by state regulators.

Bee staff writer Mark Glover contributed to this report. Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.