How Low will gas prices go?!?

Gas prices are falling again in Southern California:

California motorists paid an average of $2.565 a gallon for regular self-serve gasoline for the week ended Monday, down nearly 2 cents from the previous week, according to the Energy Information Administration, the statistics arm of the Energy Department. The U.S. average fell one-tenth of a penny to $2.236 a gallon.

Los Angeles motorists paid $2.579 a gallon, down 1.5 cents from a week ago.

After climbing for much of the year, U.S. and state gasoline prices have declined for the last two weeks. But both the California and U.S. averages are still more than 40 cents a gallon higher than a year ago.

But even if crude oil production increases (say, by the Saudis), California still has a limited refining capacity. We can pump all the oil we want, but unless there's the ability to turn it into gas for California motorists, prices can only fall so far.