Gas prices started to fall below $3 per gallon at some stations in the Richmond area yesterday, reaching levels that haven't been seen in almost eight months.

The average price of regular, self-serve gasoline locally fell an additional 7 cents early yesterday, to $3.26, the auto club AAA reported. But some stations were selling gas as low as $2.98.

The last time average prices in the Richmond area were below $3 was Feb. 20, when regular, self-serve was $2.96, according to AAA.

Less than month ago, prices surpassed $4 a gallon at some stations, and some pumps ran dry, after Hurricane Ike shut down Gulf Coast refineries and pipelines that supply fuel to Virginia and other Eastern states. Fuel supplies still have not returned to normal, though the situation continues to improve, several retailers said.

"Supplies are starting to get back up to speed after the hurricane," said Monica Jones, a spokeswoman for the Sheetz convenience chain, which had some stations run out of gas after Ike.

Yesterday, several Sheetz stations in the Richmond area had prices below $3. "Now that the price of oil is coming down, we are hopeful that there is some relief on the horizon," Jones said.

Oil prices closed at their lowest level in a year yesterday, falling below $85 a barrel even after OPEC signaled that it might tighten production in an effort to slow crude's downward spiral.

As of yesterday morning, the average price locally for regular gasoline had fallen about 42 cents a gallon in two weeks.

"The last three days, we have brought our retail [prices] down 15 cents a gallon," said Dave McComas, president and chief executive officer of the Fas Mart Convenience Stores Inc. chain, which also had several stations that went below $3 yesterday.

Yet motorists are still paying more for gasoline than last year at this time, when the average price in the Richmond area was $2.62.

AAA attributed recent declines to improving gasoline inventories, a strengthening of the U.S. dollar and decline in demand for oil and gasoline in the United States and Europe. The group said it expects prices to reach a national average of $3 a gallon by November, assuming no other supply disruptions or market jolts.

OPEC said yesterday that it would hold an extraordinary meeting Nov. 18 in Vienna, Austria, to discuss the widening economic crisis and how it is affecting the oil market.

Light, sweet crude for November delivery fell $1.81 to settle at $86.62 a barrel in regular trading on the New York Mercantile Exchange, the lowest closing price since Oct. 15 last year. In after-market trading, prices edged below $85, a key technical level that traders say could signal another plunge. Crude has shed about $60 -- or 40 percent of its value -- since soaring to a record $147.27 on July 11.
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.

The Associated Press contributed to this report.