Will Gas Prices Keep Dropping?

Sept. 12, 2006 — -- There's good news for drivers these days.

In the last week, gas prices have fallen 11 cents to about $2.62 a gallon.

Since mid-August, the average price at the pump has fallen 42 cents from a summer high of $3.04.

That means you'll save about $38 this month if your family has two cars.

Earlier this summer, "Good Morning America" financial contributor Mellody Hobson predicted prices would drop after Labor Day.

Hobson says it's all about supply and demand, and it's finally working in our favor.

The peak summer driving season just ended, so demand is down and inventories are up.

Crude oil prices are also down, and that's a big deal, because it accounts for about half the cost of gas at the pump.

Crude oil averaged about $70 a barrel in August, and it's now down to around $65 a barrel.

Then there's the Prudhoe Bay oil fields in Alaska, where British Petroleum cut production in half because of pipeline problems.

But it's already ramping up production and should be back at full capacity by late October.

Where Is Gas the Cheapest?

In the Midwest, gas averages $2.44 a gallon, the cheapest in the nation by far.

Prices in the Gulf Coast are also low, about $2.50 a gallon.

Where Are Gas Prices the Highest?

The West Coast has the highest prices -- $2.90 a gallon on average.

In California, gas is about $2.94 a gallon, a 6-cent drop from last week.

Prices are also high in the Rocky Mountain region, where they average $2.88 a gallon.

Mellody's Prediction

Hobson says that we may even see prices drop a bit more.

In the next few weeks, gas will move from a "summer blend" to a "winter blend," which is cheaper.

It's unlikely, however, that we'll see more big drops this fall.

One nightmare scenario is if another major hurricane were to hit the Gulf Coast before the season ended, which would force prices higher.