What oil's plunge means for gasoline prices

Thanks to a global supply glut that has sent oil prices tumbling, average U.S. gasoline prices could drop to $2 a gallon by this weekend.

"We are looking at a likelihood of a $1.79 to $1.99 gallon winter bottom for unleaded regular. That is the launch pad from which we will take off in the late first or early second quarter," said Tom Kloza, co-founder and global head of energy analysis at the Oil Price Information Service.

Although it is likely that U.S. oil prices are approaching their bottom, it may still take two to three weeks before consumers feel the full effect of declining prices. There is a correlation between oil and gas prices, but what consumers pay at the pump depends on refinery and distribution costs, federal taxes, corporate profits and their location. The cheapest gasoline is found in states with larger supplies of gasoline and lower state taxes such as South Carolina, Alabama and Arkansas.

U.S.-traded West Texas Intermediate crude oil was changing hands at below $38 on Tuesday .

"Regionally, the price of gasoline to the consumer includes the quality of gasoline they are buying and whether the total federal and state taxes go into that retail price," said Andrew Lipow, president of Lipow Oil Associates. "The high price markets are in California , Hawaii and Alaska . California gas prices are particularly high, because they have had refinery problems that restricted their supply over the past year."