Aug. 10 (Bloomberg) -- The average price of regular gasoline at U.S. filling stations fell to $3.85 a gallon, an industry survey showed.

Gasoline dropped 15 cents in the two weeks ended Aug. 8, according to oil-industry analyst Trilby Lundberg's survey of 7,000 filling stations nationwide. Crude oil, which accounts for 74 percent of gasoline's pump price, has fallen 22 percent from the record $147.27 reached July 11, as fuel use declined.

``This is crude oil at work,'' Lundberg said today. ``There's no factor stronger and crude oil is down about $10 dollars just in the past week. We are seeing that at the pump, and a great deal of it has been passed through already.''

AAA, the nation's biggest motoring club, said today that regular gasoline at the pump reached $3.818 a gallon, up 37 percent from $2.777 a year earlier.

Gasoline futures on the New York Mercantile Exchange fell 11.53 cents, or 3.8 percent, to $2.8874 a gallon on August 8. Gasoline prices retreated along with inventories, which have fallen 3.6 percent since July 18 to 209.2 million barrels, the Energy Department said August 6.

Falling supplies may indicate refiners are switching away from gasoline to make heating oil and other fuels, which are more profitable.

Crude oil for September delivery fell $4.82, or 4 percent, to settle at $115.20 a barrel on the New York Mercantile Exchange on August 8.

Demand Slows

U.S. gasoline demand fell a 15th consecutive week, as motorists cope with high fuel prices by driving less, a MasterCard Inc. report showed August 5.

Demand last week fell 3.4 percent from a year earlier, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report. Motorists bought an average 9.651 million barrels of gasoline a day in the week ended Aug. 1, down from 9.993 million a year earlier.

``This year will probably be the lowest gasoline demand in the U.S. since 1981,'' Lundberg said. ``It is one of the reasons that prices are falling of course. But the crude oil price is king to what gasoline prices do.''

Surging fuel prices have hurt U.S. consumer confidence, which remained near the lowest level since 1980, signaling spending may slow after the effects of the federal tax rebates fade.

Jobless Claims

The Reuters/University of Michigan final index of consumer sentiment rose to 61.2 in July from 56.4 in June. The measure averaged 85.6 in 2007.

Futures have also fallen on concern of an economic slowdown and a stronger dollar. The dollar gained the most in more than seven years against the euro on Aug. 8, reducing the appeal of commodities as an inflation hedge.

The number of Americans filing first-time claims for unemployment benefits unexpectedly rose last week to the highest level in six years, signaling the labor market continues to weaken.

Initial jobless claims increased by 7,000 to 455,000 in the week ended Aug. 2, the most since March 2002, from 448,000 the prior week. The number of continuing claims increased to a four- year high.

Gasoline prices have dropped as cash-strapped U.S. consumers, who are grappling with rising unemployment and declining home values, cut back on unnecessary trips.

The highest average price for self-serve regular gasoline was $4.37 a gallon in Anchorage, Alaska, Lundberg said. The lowest was in Tulsa, Oklahoma, at $3.50 a gallon. On New York's Long Island, the price was $4.06 a gallon.

To contact the reporters on this story: Aaron Clark in New York at aclark27@bloomberg.net; Jessica Moore in New York at jemoore@bloomberg.net.

Last Updated: August 10, 2008 17:05 EDT