The retail gasoline industry was facing the kind of crisis Monday that motorists love.
Prices had dropped so low that filling station owners in several states were frantically digging out their old $1 price signs as the cost of a gallon of regular gas fell below $2 for the first time in years.
This week, the big thing in fuel prices isn't worries about $200-a-barrel oil. It's gasoline at $1.99 a gallon and lower in parts of at least 15 states, analysts said.
The unprecedented slide in pump prices seemed to be accelerating Monday. According to the Energy Department's weekly survey of filling stations around the U.S., the average price for a gallon of self-serve regular gasoline fell 25.6 cents nationally to $2.40 over the last week, the lowest since gasoline sold for $2.371 a gallon on Nov. 6, 2006. That's a drop of $1.955, or 44.9%, since the nation's record high of $4.355 a gallon set June 23 and June 30 this year.
In California, home to the most expensive gas in the continental U.S., the average pump price plummeted 34.7 cents in the last seven days to $2.783. The California average had not been below $3 a gallon since Oct. 8, 2007. It was the lowest state average since $2.710 on Feb. 19, 2007.
The Energy Department numbers tracked very closely with those of the American Automobile Assn.'s fuel gauge report, which uses a separate survey of credit card receipts from 100,000 filling stations around the country conducted by the Oil Price Information Service and Wright Express.
Amid whatever relief motorists were feeling from the drop in prices, there was still the sobering thought that it had come at a high cost for much of the nation. Gasoline prices were like an obese person who had finally managed to drop a lot of weight, but only because he had contracted malaria, said Phil Flynn, vice president and senior market analyst for the Alaron Trading Co., who noted that demand was down in part because the U.S. economy was so weak that consumers were spending money only on essentials.
"There is just no demand for gasoline these days," Flynn said. "In the past, when prices dropped after a high spike, demand always came roaring back, but not now with the economy struggling this much."
Flynn said that an average gas price of $2 a gallon or lower for the nation was possible and that it could go as low as $2.25 in California.
