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.
“Oil really tumbled today — the market is so headline-driven,” Andrew Gross, a spokesperson for auto club AAA, which tracks fuel costs, said on Friday. “There is a lot of worry about global recessions, which will cause a big slowdown.”
The national average for a gallon of regular unleaded gas stood on Monday fell to $4.98, down from an even $5 on Friday, three days after hitting its all-time peak of nearly $5.02, 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.
According to Patrick De Haan, an analyst at GasBuddy, the national average is down almost five cents a gallon from a week ago, and stands at $4.97, with gas prices seeing their first weekly drop in nine weeks.
“Based on markets at this moment — they can and do change — the national average could fall to $4.55 to $4.75 a gallon in the weeks ahead unless trends shift,” De Haan tweeted on Friday.
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.”
U.S. Secretary of Energy Jennifer Granholm said earlier in the week that the Biden administration is working to ease the economic, including releasing 1 million barrels a day from the . 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 byand the global rebound from the . 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. 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.