U.S. drivers are experiencing gas prices that are approximately 30 to 50 cents higher than they would be under normal conditions, and experts predict these elevated costs will persist until at least late fall. This situation is occurring even as oil prices have significantly declined.
President Donald Trump has publicly called for the Justice Department to investigate major oil companies, accusing them of price gouging. "The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil," Trump stated on Truth Social. "Those prices are dropping like a rock! In other words, customers are being ‘gouged.’ I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I’m seeing!"
Despite crude oil prices falling to just over $73 a barrel, the national average for gasoline remains around $3.90 per gallon, according to the American Automobile Association. While this is down from a war-time high of $4.56 per gallon, experts note that under normal circumstances, prices would be closer to $3.45 to $3.65 per gallon. Last year at this time, gas averaged about $3.22 per gallon.
Patrick De Haan, head of petroleum analysis at GasBuddy, explained that oil and gasoline prices do not have a direct one-to-one correlation. He indicated that prices may not return to pre-Iran war levels until late fall or early winter. A key factor contributing to the sustained high prices is refinery capacity. Even with increased oil output, the ability to refine that crude oil into gasoline is a limiting factor, as refinery construction cannot happen quickly.
Scott Martin, a partner at Kingsview Wealth Management, highlighted that the final price at the pump is influenced by several elements including refinement, transportation, distribution, taxes, and existing inventory levels. He added that gas stations often sell fuel purchased or refined weeks earlier at higher prices, leading to a lag between crude oil price movements and retail gasoline cost changes. "In most cases, it can take several weeks before lower crude prices are fully reflected in retail gasoline prices," Martin said.
Experts also suggest that suppliers may be attempting to recoup losses incurred earlier in the year during periods of supply chain disruption. The easing of tensions related to U.S.-Iran negotiations is a factor, and gas prices are projected to fall to $3.50 per gallon by the end of summer, with seasonal shifts expected to help prices decrease further. However, a more significant drop to pre-war levels could be delayed, potentially extending into 2027, depending on the progression of peace talks and any further threats to the Strait of Hormuz.