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Gas prices lowest since January as July Fourth approaches

NEW YORK -- The price of gasoline has dropped to the lowest level in five months, giving drivers some relief ahead of the July 4 holiday.

The national average fell to around $3.40 per gallon on Tuesday. Gas is now below $3 in South Carolina and under $4 in every other state in the continental U.S.

Gas is down 54 cents from its peak of $3.94 in early April thanks to a drop of more than 20 percent in the price of oil. The decline means Americans are spending roughly $200 million per day less at the pump. Yet the savings hasn't encouraged people to drive — or spend — more this summer. They're buying about 5 percent less gasoline than they did last year, even though a gallon is 18 cents cheaper.

Saving a few dollars at the pump also does only so much for consumer psychology.

A private consumer research firm said Americans continue to be rattled by the sluggish economy. The Conference Board's reading of consumer confidence fell in June for the fourth month in a row. It said worries about the unemployment rate, low home values, a shaky stock market and a struggling European economy could hamper consumer spending, which accounts for 70 percent of U.S. economic activity.

Worries about the global economy are keeping oil near 8-month lows.

Prices were mixed on Tuesday as European leaders prepared to discuss a slate of proposals to fix their slumping economy. They're scheduled to meet on Thursday and Friday.

The eurozone economy has struggled for years to overcome a collapse in property values caused by the recession and huge government debts. Now, a failure by Europe's leaders to finally find a solution would likely push the eurozone economy back into recession and cut energy demand in a region that consumes 16 percent of the world's oil.

Benchmark U.S. crude lost 42 cents to $78.79 per barrel in New York while Brent crude added 69 cents to $91.70 per barrel in London.

The situation in Europe, combined with a slowdown in U.S. hiring and a drop in Chinese manufacturing activity, has contributed to the sharp drop in oil prices since the winter. Benchmark U.S. crude hit a high of $110.55 per barrel, while Brent topped out at $128.40, both on March 1.

In other futures trading, heating oil added 1.54 cents to $2.5539 per gallon while wholesale gasoline fell nearly a penny to $2.6364 per gallon. Natural gas lost nearly a penny to $2.686 per 1,000 cubic feet. 

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