Just last month, speculation about $3-a-gallon gasoline in California prompted chuckles from energy experts.

On Tuesday, consumers were smiling as regular unleaded gas was selling for less than $3 in Sacramento and other California communities.

"We're currently in the midst of a huge price drop in California and nationwide. All of that is great news for consumers," said AAA spokesman Michael Geeser.

In the Sacramento area, AAA on Tuesday reported the average price of unleaded regular at $2.89, a drop of 9 cents overnight and a huge decline from the month-ago price of $3.64. Last year, the local average was $3.18.

The story was the same elsewhere: $2.90 in Chico/Paradise, $2.94 in Fresno, $2.89 in Modesto and $2.82 in Stockton/Lodi.

Statewide, Tuesday's average price was $3.08, down 5 cents overnight and 61 cents less than the month-ago total.

Energy experts link the precipitous price declines of the past few days to falling crude oil prices, continued low demand for gas and fears of international recession. The price of oil fell to $62.73 a barrel Tuesday on the New York Mercantile Exchange, a veritable light-year removed from the record of $147.27 on July 11.

And given the litany of bad economic news, gas prices could go lower, Geeser said.

He said past AAA studies showed a significant drop-off in driving and gas consumption when prices passed the $3-a-gallon threshold.

But it's not clear yet whether the lower prices will put more people back in their cars.

"Now that we're back below $3 a gallon, I suppose there is a chance that people will be more willing to drive, creating greater demand and pushing prices higher," Geeser said. "Perhaps consumer sentiment will get strengthened after the national election and people will say, 'Hey, gasoline prices are cheaper. Let's go take a trip.' "

Geeser said AAA is still conducting its Thanksgiving weekend travel survey, but he speculated that "it could show us that more people are going to plan on traveling than had gas prices remained higher."

Severin Borenstein, director of the University of California Energy Institute, characterized the gas-price plunge as "the tiny upside amid very big" economic problems.

Borenstein predicted that falling gas prices will not prompt consumers to start buying large, gas-guzzling sport-utility vehicles. He expects jittery consumers to continue to cut back on gas usage and hold back on purchasing new vehicles until the economy improves.

The result: "There's a general slowdown in auto purchases as incomes are drying up. In a sense, this could be worse for the auto industry than $140 oil."

Still, cheaper fuel has given even gas station owners a reason to smile.

Dennis DeCota, who owns a 76 station in Marin County and is executive director of the Santa Rosa-based California Service Station and Auto Repair Association, said, "Our members were calling in, upset that volumes have dropped some 20 percent.

"But I've got to tell you the truth. I enjoy going out there and lowering the price 20 cents in 24 hours. It's been a long time. It's nice to see the consumers come in there with a sigh of relief on their faces.

"Maybe more families will go and visit each other over the Thanksgiving holiday. All in all, this is a good, positive thing."

Call The Bee's Mark Glover, (916) 321-1184. The Associated Press contributed to this report.