Phoenix, Ariz., Mar. 11, 2009.  Arizona gas prices fell below the $2 mark this week as oil prices responded to news of lower demand and the possibility of further cuts in production. Statewide, motorists are paying an average of $1.988 for a gallon of regular unleaded gasoline, a decrease of more than two cents from last week. Tucson drivers are continuing to pay the state’s lowest fuel price with an average of $1.847 per gallon, while Flagstaff drivers continue to pay the state’s highest fuel price with an average of $2.160 per gallon. The current nationwide average increased by a half penny this week to $1.938 per gallon.

Oil prices dipped to the low $40 per barrel range after reaching a two-month high of more than $47 per barrel on Monday. The drop in the commodity’s price can attributed to a report by the U.S. Energy Information Administration which revealed a lower than expected forecast for world oil demand. Meanwhile, OPEC is slated to meet in less than a week to determine whether to make further cuts to production. The cartel has reportedly cut 4 million barrels per day since September.

“This week, the market has experienced news which caused the price of crude oil to reach a two-month high before subsiding,” said Linda Gorman, director of public affairs for AAA Arizona. “And yet, despite the commodity’s movement, prices at the pump have remained fairly stable. This, in addition to the continued decline in the crude demand forecast, is a good indication that prices are likely to remain stable in the short-term.”

The cheapest gasoline in the lower 48 states can be found in Wyoming, where unleaded regular is $1.738 per gallon. California motorists are continuing to pay the most for fuel in the country with an average of $2.201 per gallon.

Motorists can visit www.AAAAZ.com/news/fuelnews.htm for fuel price information and gas saving tips or go to www.AAA.com/fuelfinder to locate the station with the cheapest gas in their neighborhood. They can also visit AAA’s Fuel Cost Calculator at www.fuelcostcalculator.com, which can help drivers plan out their fuel costs so they can budget their travel expenses in advance.

*The BTU-adjusted price of E-85 is the nationwide average price of E-85 adjusted to reflect the lower energy content as expressed in British Thermal Units - and hence miles per gallon - available in a gallon of E-85 as compared to the same volume of conventional gasoline. The BTU-adjusted price calculated by OPIS and AAA is not an actual retail average price paid by consumers. It is calculated and displayed as part of AAA's Fuel Gauge Report because according to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because "flexible fuel" vehicles can operate on conventional fuel and E-85, the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.

AAA Arizona’s Weekly Fuel Gauge includes data from gasoline stations in every Arizona community. However, only major metropolitan areas are shown in the table above.  Local prices in some communities might be higher or lower than the averages shown here.

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NOTE: AAA Fuel Gauge data may be used on a daily basis by news media Web sites, but should include attribution to AAA.