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Retail Gas Prices Keep Falling And Falling And Falling...

Relief is coming.

My colleague Melissa Francis warned you two weeks ago that if you were paying $3.10 a gallon (the national average at the time), it was likely "the most expensive drop" of gasoline you’d buy for awhile. So far she’s been right. Retail gasoline prices have finally fallen below $3 a gallon on average for regular unleaded, according to AAA.

What she may not have expected is how much prices would fall in her home state of California, where gasoline is usually the priciest in the nation. The statewide average there is now $3.16 a gallon, 4 percent lower than it was a month ago and down 9 percent from the all-time high of $3.49 a gallon hit when pump prices were skyrocketing last May. (That compares to a 1 percent drop in the past week, and a 5 percent decline in the last month for the national average.)

How low will gasoline prices go? Well there’s plenty of supply. With increases in U.S. gasoline supplies for the past 12 weeks, inventories are nearly even with where they were last year - and so far it doesn’t look like we’ll have the same level of maintenance issues that befell the industry in 2007.

For those in the Golden State, there’s more gasoline on hand than ever. West Coast inventories are at the highest levels we’ve seen in 13 years, says energy analyst Andy Lipow. “Approximately 5 to 6 cargoes of gasoline are being shipped from the West Coast to various places-most will end up in Mexico,” he says. “But some are even making their way back to the Gulf Coast.”

Exporting gasoline at a time when prices are still over $3 may seem a little strange, but lower prices will always be good news for drivers.

Questions? Comments? energysource@cnbc.com