Regular grade gasoline dropped just one-third of a cent to average $2.71 per gallon, according to the biweekly survey conducted on Aug. 21.

While a rebound in gasoline supply has helped lower prices in California, motorists elsewhere in the country reeled from increases as the largest crude distillation unit of BP PLC's Whiting, Indiana refinery remained closed for repairs.

The average price of gasoline is down 77 cents a gallon from the same year-ago period, according to the survey.

"From here, big retail gasoline price cuts are very likely, unless crude oil prices reverse course and climb back up to the May and June levels," said survey publisher Trilby Lundberg in Camarillo, California.

U.S. crude touched a new 6-1/2-year low of $39.86 per barrel on Friday following weekly data that showed U.S. energy firms added two oil drilling rigs last week, the fifth increase in a row. It settled at $40.45 a barrel.

The rise in the number of rigs emerging after a second-quarter lull in prices is adding to concerns that U.S. shale production is responding slowly to falling prices, prolonging a global glut.

Lundberg said the lower U.S. crude price may cause refiners and gasoline retailers to slash selling prices - spoiling their currently wide margins - as they try to gain a leg up on their competition.

"Retail gasoline prices may well fall more than 20 cents per gallon in coming weeks if crude oil prices do not surge," Lundberg said.

The highest-priced gasoline in the survey area of the 48 contiguous U.S. states was in Los Angeles at $3.67 per gallon, down from $3.80 in the Aug. 7 survey.

The lowest price was in Charleston, South Carolina at $2.10 per gallon.

(Reporting by Jeffrey Dastin in New York; Editing by Paul Simao)

By Jeffrey Dastin