Gas prices have fallen more than 40 cents a gallon in recent weeks and it looks like they could continue heading downward into the new year.

Kevork Djansezian, Getty Images
Kevork Djansezian, Getty Images

"The lowest price this year was the price that occurred on January 1, which was $3.28 a gallon nationally and a little below that here in New Jersey," said Tom Kloza, Chief Oil Analyst at the Oil Price Information Service in Wall Township. "I think we're headed for numbers in that neighborhood relatively soon and I wouldn't be surprised if we go below the lowest 2012 numbers between now and middle January."

The reason? Demand is weak and there is plenty of supply.

"We're through and beyond all of the problems related to Sandy. Most of the refineries are up and running and are probably making more gasoline than the market needs. The biggest thing though is demand," said Kloza. "Demand is really off. We're going to use less gasoline this year than we have in any year since 2001. It's not clear whether it's unemployment, underemployment, changes in behavior or whether it's something simpler like better mileage standards."

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If there is no resolution by the time of the "fiscal cliff" deadline, it would mean a drop in gross domestic product and investment money coming out and that could have a further impact on gas prices. "The good news with that, which is a very small silver lining to a dark cloud, is that oil prices would drop.

If the fiscal cliff happens, crude oil prices could be in the sixties next year. That would mean lower prices, but would also mean a lot less activity on the roads because people would lose jobs and we'd lose investment in government projects. So it's not necessarily something we want to route for."

Kloza will not rule out a spike in home heating oil and diesel prices over the next few months.

"Don't believe the coast is clear. I still think inventories are very low. We've had a warm start to December, but the winter has barely started and I still think there's the capacity for some spikes in heating oil prices and by extension diesel prices in the next 90 days," said Kloza.