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Gas Prices Record Largest-Ever Drop, Close In on $3

The average price of a gallon of gasoline in the United States recorded its largest drop ever as crude oil prices plunged and consumer demand continued to wane, an industry analyst said on Sunday.

The Lundberg Survey released this weekend showed the average price of a gallon of self-serve regular down 35 cents over the past two weeks to $3.31. Mid-grade was $3.45 as of Friday and premium was $3.57.

"If crude oil prices don't spike, we can expect further price cutting for two reasons," Lundberg said. "Gasoline demand will continue to shrink in our weak economic condition, and retailers, who have been receiving deep buying price cuts, will be anxious to pass through any further price cuts they receive quickly. They need the sales."

Lundberg said the average gasoline price could fall below $3.00 a gallon as early as December.

"If crude oil prices don't spike, we can expect further price cutting for two reasons," Lundberg told Reuters. "Gasoline demand will continue to shrink in our weak economic condition, and retailers, who have been receiving deep buying price cuts, will be anxious to pass through any further price cuts they receive quickly. They need the sales."

According to the Lundberg survey, drivers in Honolulu paid an average of $3.91 a gallon for unleaded gas — the highest in the nation. Wichita, Kansas, had the lowest average price, at $2.79.

The Lundberg Survey averages prices from 5,000 gas stations around the country.

The price of crude last week dropped below $78 a barrel, reflecting investor pessimism.

Click here to read The Lundberg Survey.