Wholesale gasoline prices fell this afternoon, with the NYMEX contract reaching $1.9975/gal, marking the first time in 2010 that prices have been under $2. It's been nearly a month since prices have been under $2, the last time in the days before Christmas.

This will be welcome news to U.S. and Canadian motorists, who've seen national averages climb to levels not seen since October 2008 in recent weeks. The U.S. Average peaked on January 14 at $2.758/gallon while prices in Canada peaked the same day at 102.138c/L. Prices in Canada had not reached that level since November 2009.

Meanwhile, oil is trading closer to $75 a barrel, a far cry from it's peak on January 7 when it hit $83/barrel. If you noticed, it took one week for gasoline prices to hit their peak, taking some time for the price increases to show up at the pump.

Much of today's losses are due to the significant gains in gasoline inventories last week, as reported today by the U.S. Department of Energy. While gasoline inventories gained 3.9 million barrels, it is more shocking to see that inputs to oil refineries dropped to levels not seen since Hurricane Ike ravaged the Gulf. (READ MORE!)

However, oil, distillate, and propane inventories all fell, with oil posting the smallest loss. Analysts polled by Bloomberg largely expected gasoline to post a modest 1.75 million barrel gain, so the 3.9 million barrel gain was quite surprising. Gasoline stockpiles now stand 12 million barrels above their year ago levels, a healthy start for 2010.

Another important factor- overall oil demand- shows that sluggish demand is still a key factor. Demand for last week was down nearly 2% over the same period last year, showing that the economy is still rather slow to recover. The big picture showed overall demand under 19 million barrels per day. That pales against when the economy was consuming more than 20 million barrels of oil per day in 2008.

The largest gain in gasoline stocks was seen in the Midwest, with a whopping 2.5 million barrel gain. Such a large gain may lead Midwest prices lower than the rest of the country as supply outpaces demand. Total inventories in the Midwest total 54.5 million barrels, the highest level seen in January since 2007.

Oil and other product imports are also much under where they were last year. The same week in 2009 saw imports at 11 million barrels per day, while they currently sit just above 9 million barrels. The picture seems to demonstrate what a hit demand has taken over the last year- showing incredible weakness in the oil industry.