The national average price of a gallon of gasoline has fallen below $3 for the first time since February.
The average price for a gallon of regular gas was $2.991 Saturday, according to the AAA's daily survey of up to 100,000 self serve gas stations by the Oil Price Information Service and Wright Express. That's down from $3.040 Friday.
A year ago, the national average price of a gallon of gas was $2.81, according to AAA. A month ago, it was $3.835.
Gasoline prices have been sliding along with crude oil prices since July, when gasoline hit a peak of $4.114.
According to the survey, gas was the least expensive in Oklahoma, with a gallon of regular averaging $2.58. Other cheap states were Missouri and Kansas, while the most expensive was Alaska, with a gallon averaging nearly $3.92. Hawaii and California also ranked high.
Gas prices likely will fall further, and figure to hit $2.50 to $2.60 a gallon if oil goes down to $50 a barrel as some analysts suspect.
While motorists welcome the decline in price, they are wary given the huge fluctuations the past couple of years, says Kit Yarrow, a consumer psychologist at San Francisco's Golden Gate University who has studied how high oil prices have affected Americans' buying behavior.
"People have learned that they can't trust gas prices to stay low," she says.
She says she doubts motorists — who cut fuel consumption as prices rose — will return to their old ways, even as prices have come down.
"Everywhere you go, be it the store, the diner, whatever, you hear people talking about there gas costs and how they need to cut back," David Robinson, 67, of Lakewood, N.J., said recently as he was getting coffee at a convenience store. "You still hear it, even though gas keeps dropping."
The drop in gasoline prices comes as crude oil rose Friday, rallying above $71 a barrel on speculation that the Organization of Petroleum Exporting Courntries might slash output to try to stop crude's downward spiral.
Light, sweet crude for November delivery rose $2 to settle at $71.85 a barrel on the New York Mercantile Exchange after earlier rising as high as $74.30. On Thursday, prices lost $4.69 to settle at $69.85 a barrel.
Despite Friday's modest rally, oil is still down $75 — or 51% — since catapulting to a record high $147.27 July 11.
The pullback in oil and gas comes as a widening economic slowdown forces a wholesale contraction in U.S. energy demand: Americans are driving less, airlines are keeping planes on the ground and businesses are winding down operations.
Worried about the financial fallout of the oil price drop on their countries, OPEC, which controls 40% of the world's oil supply, called a special meeting next Friday in Vienna to address the slide. Underscoring the cartel's anxiety, it moved up the meeting date by nearly a month.
An Iraqi lawmaker said Friday that his government expects to cut its budget next year by $15 billion because of falling oil prices. Abbas al-Bayati, a senior lawmaker of the United Iraqi Alliance, the largest Shiite bloc in parliament, said the recent plunge would cut into earlier budget estimates, which were made when crude was hovering around $120 a barrel.
Analysts say OPEC could decide to trim output by as much as 1 million barrels a day in a bid to halt the slide, in addition to a 500,000 barrel per day cut announced last month.
"Demand is really in trouble," says Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. "Every week we get figures showing falling U.S. demand for energy. European demand is just beginning to turn down, and all indications are that China is in for a significant economic downturn."
"We could have prices in the low $60 range very soon," he said.
Still, some analysts say crude's decline has been overdone.
"Even in a dire economic situation, a lot of energy use isn't discretionary, so I expect prices to bounce back at some point," said Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney.