Gas prices fall ahead of busy July 4th travel weekend

American motorists are getting some minor relief, with gasoline prices registering their first weekly drop in more than two months amid declining oil prices and a dip in consumer demand.

"The recent high prices may have led to a small drop in domestic gasoline demand as fewer drivers fueled up last week," Andrew Gross, AAA spokesperson, said Tuesday in a statement. "This dip, coupled with less costly oil, has taken some steam out of surging pump prices. And this is happening right before drivers gas up for what AAA forecasts will be a busy July 4th travel weekend." 

The national average for a gallon of regular unleaded gas on Tuesday fell to $4.97, down 5 cents from a week ago and from an even $5 on Friday, according to AAA, which updates the figure daily. 

A drop in the price of crude oil, coupled with the first weekly dip in demand after three weekly increases, should offer at least a short-term respite from record-high gas prices, Gross told CBS MoneyWatch on Friday.

According to Patrick De Haan, an analyst at GasBuddy, the national average is down six cents from Thursday, with gas prices "poised to continue falling this week."

White House has few levers to pull

People tend to mistakenly attribute the cost of gas to the U.S. president, when in reality there's a limit to what the White House can do to lower fuel prices, said Gross, who noted that about 60% of the price at the pump is dictated by the cost of crude. "The local gas station sets its price, and there are all sorts of factors, including location and how many people are working there."

President Biden said Monday he hopes to decide on whether he'll support a federal gas tax holiday by the end of this week, telling reporters he's "considering" whether to back a temporarily lifting of the tax, which is 18.4 cents a gallon.

U.S. Secretary of Energy Jennifer Granholm recently said the Biden administration is working to ease the economic pain caused by high gas prices, including releasing 1 million barrels a day from the Strategic Petroleum Reserve. Still, "there's not a quick fix," she added.

Another potential White House move could help boost U.S. production, but would not bring immediate relief, analysts noted. 

"We expect the administration could activate the Defense Production Act for the expansion of refinery capacity, but any market/consumer impact from these efforts will be a longer-term consideration," Raymond James Equity Research analysts Ed Mills and Chris Meekins said in a report. 

Impact felt globally

Americans are not alone in feeling the impact of higher gas prices. Motorists around the globe are contending with skyrocketing prices for gas and diesel, driven by Russia's war in Ukraine and the global rebound from the COVID-19 pandemic. Energy prices are a major factor behind inflation and the daily cost of living rising worldwide.

Nguyen Trong Tuyen, a motorcycle taxi driver working for the Grab online ride-hailing service in Hanoi, Vietnam, is switching off the app during rush hour.

"If I get stuck in a traffic jam, the ride fee won't cover the gasoline cost for the trip," he told the Associated Press. 

Gasoline and diesel prices are a complicated mix involving the cost of crude oil, taxes, the purchasing power and wealth of individual countries, government subsidies (where they exist), and the cut taken by intermediaries such as refineries. Oil is priced in dollars, so if a country is an energy importer, the exchange rate also plays a role. The recently weaker euro has helped push up gasoline prices in Europe.

Geopolitical factors, such as the war in Ukraine, also factor in. Buyers shunning Russian barrels, and Western plans to ban Russian oil, have shaken energy markets already facing tight supplies from the rapid pandemic rebound.

Isabelle Bruno, a teacher in the Paris suburbs, now takes the bus to the train station instead of making the 10-minute drive.

"My husband and I are really worried about the holidays because we used to drive our car really often while visiting our family in southern France," she said. "We will now pay attention to train tickets and use our car only for short rides."

Leo Theus, a graphic designer from the San Francisco Bay Area city of Hayward, is "strategic" in budgeting gas to meet clients — he might not fill the tank all the way. Gas prices in California are the highest in the U.S., reaching close to $7 per gallon in some parts of the state.

When it comes to going to a club or bar after work, "you've got to think about gas now, you got to decide, is it really worth it to go out there or not?" Theus said.

— The Associated Press contributed to this report.