Gasoline falls under $3 a gallon in U.S.

With California leading the way, gasoline prices continued to fall around the nation in the last week, dropping the U.S. retail price below $3 a gallon for the first time in five weeks, a government report showed Monday.

California’s average retail gasoline price fell 7.8 cents to $3.148 for a gallon of self-serve regular, Energy Department data show. The state’s average pump price was up 66 cents a gallon from a year earlier.

Meanwhile, the average U.S. pump price for regular gasoline fell 4 cents to $2.977 a gallon, the lowest level in three months, based on the Energy Department’s weekly survey of about 800 filling stations. The U.S. average was 81 cents a gallon higher than a year ago.

Prices have been declining because of lower oil prices, slumping demand and increased fuel supplies.

Demand for gasoline fell 1.7% to 8.96 million barrels a day in the week ended Jan. 18, the most recent figures from the Energy Department.

Cheaper gasoline mirrors the fall in crude oil prices as traders worry that petroleum demand will decline in a weaker U.S. economy. In New York futures trading, light, sweet crude for March delivery rose 28 cents to settle at $90.99 a barrel after falling as low as $88.78 earlier.

Lower gasoline prices should be short-lived, however, because pump prices are expected to rise this spring as refiners reduce production to maintain their equipment and driving picks up, increasing gasoline demand.

In the Energy Department’s latest weekly survey, the most expensive region was the West Coast, where gasoline fell 6.9 cents to $3.086 a gallon. Among major cities, San Francisco again had the highest gasoline price at $3.253, down 7.3 cents.

The Gulf Coast states had the lowest price by region, at $2.875 a gallon, down 2.9 cents. Denver had the cheapest pump price at $2.819, down 0.6 cent.

The price truckers paid for diesel fuel fell 1.1 cents in the last week to $3.259 a gallon, the lowest level since late October but still up 84.6 cents from a year ago.

The New England states had the most expensive diesel at $3.583 a gallon, down 1.1 cents. The Gulf Coast and Midwest had the most affordable diesel at $3.218 each, down 0.4 cent and 1 cent, respectively. In California, diesel cost $3.346 a gallon, down 1.4 cents.