Costs at the pump have also been edging down in Minnesota.
NEW YORK - Soaring gasoline prices are in the rearview mirror.
For the first time in months, retail gasoline prices have fallen below $3 a gallon in places, including parts of Michigan, Missouri and Texas. And the relief is likely to spread thanks to a sharp decline in crude-oil prices.
The national average for regular unleaded gasoline is $3.51 per gallon, down from a high of $3.98 in early May. Last week's plunge in oil prices could push the average to $3.25 per gallon by November, analysts say.
Economist Philip Verleger equates the falling price to "a stimulus program for consumers," leaving them more money for clothes, dinners out and movies. Over a year, a 50 cents-per-gallon drop in gasoline prices would add roughly $70 billion to the U.S. economy.
Prices at the pump have been edging down lately in Minnesota, too. The state average for a gallon of regular unleaded was $3.55 on Sunday, according to AAA Fuel Gauge Report. That's well above the year-ago average of $2.75, but down from $3.69 a week ago. The state record was $3.98 in July 2008.
In the Twin Cities, the average for a gallon of unleaded on Sunday was $3.52, up from $2.73 a year ago but down from an average of $3.65 last week. The metro record was $3.99 in June 2008.
Prices for oil, gasoline and other commodities dove last week along with world stock markets over concerns the global economy is headed for another recession. When economies slow, demand for fuel falls as drivers cut back on trips, shippers move fewer goods and vacationers stay closer to home. Oil fell to $79.85 per barrel Friday, a drop of 9 percent for the week. Oil reached a three-year high of $113.93 on April 29.
A word of caution
Economists caution that gasoline savings, while welcome, won't matter much to people if the worst economic fears come to pass. "Yes, it produces some relief, your bill at the gas pump goes down, but it's going down because there are worries that people won't have jobs," said James Hamilton, an economics professor at the University of California, San Diego. "The news has not been good."
Gasoline has averaged $3.56 this year, the highest yearly average ever. Americans have cut back on driving in the face of high prices, but they are likely to spend more on gasoline in 2011 than ever before -- close to $490 billion, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.
Kloza said the latest drop in prices will stick around through most of the fall. And while that may only add $20 a month to a typical commuter's wallet, drivers say it matters.
Pat Wolf, 60, a retired information technology professional from East Lansing, Mich., responded with a "Holy Mackerel!" when he got a text from his wife on Friday morning that said a station nearby was selling gas for $2.98 per gallon.
Wolf said prices in the area were $3.49 earlier in the week and he had no hope that they'd fall below $3. "It's one other thing in the back of your mind if you are deciding whether to buy some gizmo or other," he said.
Differences by state
Gasoline prices have always varied from state to state, but the gap now is especially big. Drivers along the coasts are paying significantly more than drivers in the middle of the country, analysts say. California drivers are paying the highest average price in the lower 48 states, at $3.89 per gallon on Sunday. Missouri drivers are paying the least, $3.21 per gallon.
Differences in state taxes explain much of the gap. Another factor is that most of the oil used by refineries on the coasts comes from overseas, making it far more expensive than oil piped to refineries in the middle of the country from places such as North Dakota and Canada.
Staff writer Jennifer Bjorhus contributed to this report.