Cost of Gas Staying Under $4 Per Gallon

Four-dollar gas is quickly becoming a thing of the past, but not before siphoning billions from consumers and forcing the economy into low gear.

After topping $4 a gallon in 17 states and threatening to surpass the all-time record of $4.11, reached in July 2008, regular-grade gasoline now averages $3.69.

That's 29 cents below May's $3.98 high. Gas prices now average $4 only in Hawaii, Connecticut and Illinois and $4.24 in Alaska.

The slide in prices — linked to rising inventories and soft demand — could continue through summer, soothing fragile consumer sentiment and potentially boosting the sluggish economy.

Consumer spending accounts for more than two-thirds of the economy. With gas prices up $1 above year-ago levels, fuel will cost consumers $50 billion more in the first half of 2011 than they spent in the first six months of 2010, says Moody's Analytics senior economist Matthew Sweet.

"When gas prices broke $4, you saw a lot of consumers hunker down. It definitely took some steam out of spending,'' Sweet says. "It works the same way on the way down. Consumers will remain cautious, but as gas prices head toward $3.50, they'll take it as a sign of relief and maybe spend a little more."