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Relief at the pump (finally): Gas prices plunge

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Retail gas prices have dropped at the fastest rate in nearly a year to the lowest national average since January, according to AAA.

The national average for regular gasoline was $3.40 per gallon on Monday, a nearly 20-cent per gallon decline in just the past month. AAA says the national average could drop another 25 to 30 cents per gallon through December. Gas prices in many Southern states are already below $3.25 a gallon and some South Carolina residents paying less than $3 a gallon at the pump.

Gasoline's dramatic price slide

"Most drivers are paying the lowest gas prices in more than eight months due to abundant gasoline supplies, the end of the summer driving season, lower oil costs and the switchover to winter-blend gasoline," said AAA spokesman Avery Ash. "Supply and demand is working in most consumers' favor with consumption down and gasoline stocks more than 10 percent higher than a year ago."

(Read more: Gasoline will get cheaper this winter: Pro)

Retail gasoline prices are following the slide in gasoline futures, which has outpaced the fall in oil prices in September. RBOB gasoline futures plunged 9 percent this month compared to a 5 percent drop in West Texas Intermediate crude futures. On Monday, RBOB gasoline futures were the biggest decliner in the energy market once again, falling nearly 2 percent to a session low of $2.62 per gallon, while WTI oil prices were down 1 percent, hitting a session low of $101.50.

Prices for gasoline on the New York Mercantile Exchange have fallen roughly 11 percent in September as supplies reached their highest level in three years and the peak summer driving season ended, noted Dave Lutz, head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. in Baltimore.

"The availability of inexpensive oil has enabled refineries to increase their production of gasoline at a rate that has exceeded demand," Lutz commented in a market note. "This drop in gasoline prices should be a tailwind for US consumers toward years end."

—By CNBC's Sharon Epperson; Follow her on Twitter: