If you filled up your tank recently, you may have noticed a little relief at the pump. Gas prices have been ticking down over the past week, and that is welcome news for drivers who have been feeling the squeeze all year. But before you celebrate, here is the bigger picture: prices are still far higher than they were before the war with Iran began, and a full return to those levels is not expected anytime soon.
Where Prices Stand Right Now
The national average for a gallon of regular gas sat at $4.39 on Friday, according to AAA. That is 16 cents lower than the week before, marking the biggest weekly drop of the year so far. The dip came as the United States and Iran moved closer to a possible deal to extend their ceasefire.
Still, that figure is a far cry from the roughly $3 per gallon Americans were paying before the war started.
Why Prices Are Tied to a War Thousands of Miles Away
Even though the United States is the world’s largest oil producer and imports relatively little from the Middle East, American gas prices move with global oil markets. When conflict disrupts oil supply anywhere in the world, consumers feel it everywhere, including at pumps across the country.
Oil prices have been trending generally lower since mid-May, and that has pulled gas prices down with them.
Why a Big Drop Is Unlikely Anytime Soon
Here is where things get complicated. Even if a formal deal between the U.S. and Iran is reached, several obstacles stand in the way of a meaningful price recovery.
For one, shipping through the Strait of Hormuz, a critical route for oil exports, remains uncertain. Tanker owners may not feel safe enough to return to that waterway in large numbers right away, even after a ceasefire is locked in. The International Energy Agency has estimated that restoring steady export operations through the region would take a minimum of two to three months after any mines are cleared.
On top of that, Persian Gulf countries that scaled back production when the export route was disrupted will need time to ramp things back up. That process is not quick or simple.
Summer Is Not Helping Either
Beyond the war, seasonal demand is working against drivers. Americans drive more in the summer, which pushes fuel demand higher. U.S. gasoline inventories fell for the 15th consecutive week as of May 22, sitting 6% below the five-year average for this time of year, according to the U.S. Energy Information Administration.
Robert Yawger of investment firm Mizuho Securities USA cited in an Axios report pointed out that refiners typically build up fuel storage ahead of the summer driving season, but that has not been happening this year, adding more pressure to already tight supplies.
What Washington Is Doing About It
The White House has been trying different approaches to bring prices down. President Trump said earlier this month that he would like Congress to suspend the federal gas tax, but there has been little movement on that front so far. When asked about it on Wednesday, Trump suggested more developments could come in the next week or two, saying a lot of good things are happening.
The Political Question Hanging Over All of This
Analysts widely expect gas prices to remain above pre-war levels through the fall and beyond. That raises a tricky question heading into the midterm elections: if prices are falling but still relatively high, will voters give credit for the improvement, or hold the administration accountable for the overall cost? That is a question both parties will be watching closely in the months ahead.