Gas prices reverse course, fall below $3

— -- The nationwide average price of gasoline fell to less than $3 a gallon — to $2.991 on Saturday and then $2.954 on Sunday, travel organization AAA reported. On Mondday, it dipped again — to $2.923.

It's the first time gas has been that cheap since February. And pump prices will likely keep falling. Based on the current wholesale price of oil, consumers can expect to pay $2.80 or lower by Halloween, says Peter Beutel, president of Cameron Hanover, an energy risk management firm. "If everything stays the same, we've got more coming," he says.

That's a big switch. Prices until recently have been running about a dollar more than a year ago. That run-up began in mid-2007, when commodities speculators began to bet big on the future price of oil as a hedge against a weak U.S. dollar and rising U.S. inflation, says Beutel.

Those bets ultimately translated into a record $4.114 a gallon at the pump, set July 17. But then consumers began driving less. And for a variety of reasons, the dollar began to gain strength against the euro, and the threat of inflation began to recede.

When the financial markets imploded in late September, U.S. drivers slammed on their collective brakes. Demand for gasoline, which had been slipping 2% to 3% each week for most of the year, sank 9.7% in the week ended Oct. 10, according to the Department of Energy.

The financial market meltdown "kicked demand loss into another gear," says Beutel.

The state average on Sunday was under $3 in 32 states, according to AAA. Cheapest: $2.539 in Oklahoma. Most expensive: $3.899 in Alaska.

"The economy is quite sick, and that's why demand is down …, and that is the major, if not singular, cause of the cheap-gasoline effect," says Tom Kloza, senior analyst at the Oil Price Information Service, a consulting firm.

When fuel prices drop before a national election, says Kloza, some people suspect the administration is interfering with the market to curry favor with voters. But Kloza says the global petroleum market is too big and complex to manipulate like that.