Summary
NEW YORK (AP) — The Iran war has rattled the global flow of oil, with steeper fuel costs already straining households worldwide. And in the U.S., drivers are now facing the highest prices they've seen at the pump in nearly two and a half years.
According to motor club AAA, the national average for a gallon of regular gasoline jumped to $3.79 on Tuesday, up from $2.98 consumers were paying before the U.S. and Israel launched the war with joint attacks against Iran on Feb. 28. The last time gas prices were as expensive as they are now was in October 2023.
“It’s pretty hard. I mean, times are tough for everybody right now," Amanda Acosta, a Louisiana resident, told The Associated Press while filling up her car's tank this week. “I’m getting way less gas and paying way more money.”
She isn't alone. Pain at the pump has been one of the most immediate economic impacts of the conflict, because the price of crude oil — the main ingredient in gasoline — has soared and swung rapidly in recent weeks, due to ongoing supply chain disruptions and cuts from major producers across the Middle East. Brent crude, the international standard, was trading at over $102 a barrel on Tuesday, up from roughly $70 just weeks ago. And benchmark U.S. crude is now going for nearly $96 a barrel.
Many eyes are on the White House. Before the war, President Donald Trump once bragged about keeping gas prices low. But he's since pivoted to try and paint high oil prices as a positive outcome for the U.S. In a post on his social media site last week, Trump said that, because the U.S. is now largest crude producer in the world, “when oil prices go up, we make a lot of money.”
Companies that supply oil benefit from higher prices. But steeper costs always pinch consumers' wallets — and today's rising prices arrive as many households continue to face wider cost of living strains. It could also push up already stubborn inflation, at least in the short run, and potentially hammer the economy more significantly if steep costs drag on. Experts say that that could apply more pressure on the Trump administration, particularly as affordability continues to stay at the top of voters' minds.
Drivers see impact of higher fuel prices
"I just want all of it to end. I just want to get out of there, out of Iran," said Meghan Adamoli, a New Jersey resident who was among customers filling up at a Multani station on Tuesday. While Adamoli said she can personally “roll with the punches” when it comes to gas prices, she knows that a lot of others can't.
Dan Bradley, a flatbed truck driver from Pennsylvania, said he's felt the rising prices for both his work and personal vehicles. Beyond regular gasoline, the U.S. average for diesel topped $5 a gallon on Tuesday, per AAA, up from about $3.76 before the conflict started.
“It sucks when you’re filling up,” said Bradley. “What are you going to do, not get gas?”
Meanwhile, Texas resident Clay Plant said that rising oil costs is good for the economy of his town, Lubbock. He noted that he sees more people work as drilling picks up.
“It’s kind of a good sign for us in west Texas,” Plant said. “I look at it as my friends and family get to eat and they get to go to work.”
Search for more supply and uncertainty ahead
The U.S. is now a net exporter of oil — and other parts of the world that rely more heavily of fuel imports from the Middle East, notably Asia, have seen more stark energy shocks amid the war. But that doesn’t mean America is immune to price spikes.
Oil is a commodity traded globally. And most of what the U.S. produces is light, sweet crude — but refineries on the East and West coasts are primarily designed to process heavier, sour product. As a result, the country also needs imports.
The road ahead is uncertain, and prices could worsen if the war drags on. Amid the war, Iran has effectively halted nearly all tanker movement in the key Strait of Hormuz, cutting off a vital passageway where roughly one-fifth of the world’s oil once sailed through on a typical day. That’s also led to cuts from some major producers in the region, because their crude has nowhere to go. And Iran, Israel and the U.S. have all struck oil and gas facilities.
All of this has left countries scrambling for more supply. Last week, the International Energy Agency pledged to release 400 million barrels of oil available from its member nations’ stockpiles. Trump, who previously downplayed the need to tap into reserve oil, later confirmed that the U.S. would pull 172 million barrels from the Strategic Petroleum Reserve as part of the IEA’s effort. The administration also announced it will temporarily free up Russian oil from U.S. sanctions for its war on Ukraine.
Still, analysts say these efforts will be a short-term bridge. Refineries buy crude oil in advance, and it takes time for new supply to trickle down to consumers. And while steep crude costs is the top driver of gas prices today, a handful of other factors are also on the table. U.S. gas prices typically tick up a bit at this time of year, as more drivers hit the road and the warming weather brings a shift to “summer blend” fuel, which is more expensive to produce than winter blend.
As always, some states also have pricier averages than others, due to factors ranging from nearby refinery supply to differing tax rates. On Tuesday, California had the highest average of over $5.54 per gallon, while Kansas had the lowest of about $3.21.
Experts warn that all of this could eat into wider spending. As consumers pay more to cover necessities like gas, many households — particularly those that are middle or low income — will be forced to cut their budgets in other places, explains Francesco D’Acunto, a finance professor at Georgetown University. More expensive fuel also trickles into other sectors, from transporting groceries to household utility bills.
These combined inflation shocks, and overall high uncertainty during times of war, also “makes many houses and consumers freeze,” D’Acunto added. He said that could cause some to hold off on bigger financial decisions — like buying a car or house — farther down the road. “So potentially even that will have such an effect on the overall economy.”
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AP Journalists Stephen Smith in Madisonville, Louisiana, Geoff Mulvihill in Cherry Hill, New Jersey, and Mingson Lau in Claymont, Delaware, contributed.