Why gas prices could drop below $3 a gallon

Don't look now, but there's good possibility the average price for a gallon of gasoline in the U.S. might drop below the $3 threshold in the near future.

AAA reports the average national price for a gallon of regular unleaded gas fell for 16 straight days earlier this month, with the average price as of Monday standing at $3.34 per gallon. That's the lowest national average in more than seven months.

According the fuel-price trackers at GasBuddy.com, several major factors are combining to push down retail gas prices.

First of all, international events. Global crude prices have dropped more than $15 per barrel from their peak in June, when violence in Iraq was on the upswing. Even the ongoing tensions between Russia and the West over the crisis in Ukraine and the always volatile Middle East haven't yet led to a global oil price spike.

The U.S. Energy Information Administration (EIA) says the price of North Sea Brent crude, a major benchmark on the international energy markets, has stayed below the symbolically important, $100-a-barrel level since earlier this month, its lowest levels in over two years.

The EIA also notes that, despite ongoing fighting in Libya, crude production there increased significantly over the summer, from 200,000 barrels per day (bbl/d) in June to nearly 900,000 bbl/d by mid-September.

And of course, U.S. oil and natural gas production remain at a 28-year high, due in part to the nation's boom in shale oil. Americans are burning less gas as well, due to more fuel-efficient vehicles and fewer miles being driven, especially by younger consumers.

Autumn also signals the end of the peak, summer driving season and the switch-over by U.S. refineries to winter blends of gasoline, which are less costly to produce.

GasBuddy chief oil analyst Tom Kloza said you may not be seeing gas selling below $3 a gallon in places like California, New York, Connecticut or Chicago, but "we believe that more than 30 states could see prices fall below that number during the Christmas shopping season."

He added that, as of mid-September, retailers in at least 17 states were selling gasoline at prices below the $3-a-gallon mark.