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 it 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.
Arthur De Villar, a 48-year-old safety inspector for the Federal Aviation Administration, paid $2.96 for gasoline near his home in Manchester, Mo., a suburb of St. Louis and he recently replaced his SUV with a four-door sedan.
With three boys at home between the ages of 11 and 14, the money De Villar saves on gas still gets spent. But it goes to the amusement park, a Cardinals baseball game or the movie theater.
"It's far better to be able to put (the money) anywhere other than in the gas tank," he says.
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 gasoline, diesel and jet 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.
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," says James Hamilton, an economics professor at the University of California, San Diego. "The news has not been good."
And gasoline prices remain historically high. Gasoline has averaged $3.56 this year, the highest yearly average ever. Americans have cut back 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 says 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.