CAMARILLO, Calif – A national survey shows gas prices have dropped a fraction below the $4-dollar mark.
The average price of regular gasoline at self-serve stations was $3.996 a gallon Friday. Mid-grade was $4.13 a gallon and premium went for $4.24. That's according to the Lundberg Survey of 7,000 gas stations nationwide, released Sunday.
"The crude oil market has imposed a down price correction on itself, and this oil price slide is rapidly being translated into a gasoline price correction," said survey editor Trilby Lundberg.
Prices are at their lowest level since May 16 and are an average of 11.7 cents less per gallon than two weeks ago.
Still, the survey showed the average U.S. price for gas is $1.11 higher than it was a year ago.
Diesel was at $4.80.
The cheapest gas was in Wichita, Kan., where the price for regular was $3.61 a gallon.
Anchorage ranked the nation's highest: $4.43 a gallon for regular.
Whether or not any bubble has burst, Americans now live in an economy where the prospect of a gallon of gas for less than $4 is cause for relief.
The national average for a gallon of regular pulled back to just above $4 a gallon and oil tumbled to its lowest point in weeks Friday on the belief that prices have yet to reflect just how badly demand has deteriorated in the United States, the world's thirstiest oil consumer.
Prices at the pump are poised to dip even further, and could cost as much as 25 cents less by Labor Day, AAA spokesman Geoff Sundstrom said.
"People say typically prices shoot up like a rocket, fall like a feather. But this time ... it looks like it's different," Sundstrom said. "The retail sector is interested in bringing these prices down as fast as they can to stimulate business in their convenience stores."
In the trading pits, oil continued on a two-week sell-off. Light, sweet crude for September delivery fell $2.23 to settle at $123.26 a barrel in on the New York Mercantile Exchange. Earlier the contract dropped as far as $122.50, its lowest point since June 5.
Many analysts say the market's momentum points to further declines. Crude has fallen in seven of the last nine sessions, and is down more than 16 percent from its peak above $147 a barrel earlier this month.
"There's just nothing sufficiently bullish coming into the market right now to sustain a rally," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "We're just seeing a new theme in which demand has become a very important part of the equation."
Still, prices remain about 65 percent higher than they were this time last year.
Sundstrom said such a large decline suggests demand is fading. Retail prices have fallen about a dime per gallon in just the past week.
"We're seeing a historic change in driving habits," Sundstrom said, although he added that "we still have a long way to go before we get back to the comfort zone, if you will, for the consumer."
While all that talk on trading floors has shifted to demand worries, analysts note that prices could rebound on even a temporary cut to supply.
The abduction of five crew members from a Swedish boat in Nigeria's oil-producing Niger delta region was a reminder that much of the world's oil is still pulled from politically volatile regions. The African nation is a major supplier to the U.S. Earlier in the week, Nigerian militants threatened to blow up pipelines in the region within a month.
Investors are also watching for any sign in increased tension between Iran and the West.
"There is a palpable sense of exhaustion amongst traders after the steep sell-off of the past two weeks, and many think we are in for a period of stabilization," said Addison Armstrong, director of market research at Tradition Energy. "This notion is being supported by renewed concerns about events in Nigeria and the Middle East."
In other Nymex trading, heating oil futures fell 4.42 cents to settle at $3.5229 a gallon while gasoline futures lost 2.71 cents to finish at $3.0323 a gallon. Natural gas prices sank 23.9 cents to settle at $9.084 per 1,000 cubic feet.
In London, September Brent crude fell 97 cents to settle at $124.52 a barrel on the ICE Futures exchange.
The Associated Press contribued to this report.