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Energy Regulation · Gas Prices · Oil Industry · Political Pressure
President Donald Trump tasked the Justice Department to investigate "big Oil Companies" for alleged price gouging, despite U.S. gasoline prices decreasing 49 cents a gallon in the last month to an average of $3.93, which is 13% lower than a month ago but 32% higher than before the Iran war.
Crude oil (WTI) fell 27% in the last month, trading at $70.45 a barrel. Karen Young, a senior research scholar at Columbia University’s Center on Global Energy Policy, stated that gasoline prices do not work that way in the U.S., citing lags in market changes reaching consumers.
The Energy Information Administration (EIA) reported that oil prices constituted 51% of gasoline costs last year, with federal and state taxes contributing 17%, refining costs and profits 14%, and distribution and marketing 17%. Rob Smith, director of global fuel retail at S&P Global Energy, explained that retailers initially absorbed some crude price increases and are now recouping losses as prices fall.
Bethany Williams, spokesperson for the American Petroleum Institute (API), confirmed that gasoline prices do not move in lockstep with crude oil. S&P Global Energy does not expect Persian Gulf oil production to fully rebound until at least the first quarter of 2027.
U.S. motorists are still paying almost $1 more per gallon than before the war, with Brown University’s Watson School of International and Public Affairs estimating higher fuel prices have cost Americans an average of over $474 per household, totaling $62.1 billion overall.
