Gasoline costs 50% more in the US than it did before the Iran war
[May 06, 2026] By
CATHY BUSSEWITZ
NEW YORK (AP) — The price of a gallon of regular gasoline climbed 31
cents in the past week, spiking to an average of $4.48 per gallon
Tuesday, according to AAA, hitting the wallets of drivers after rising
50% since the war with Iran began.
The main reason drivers are paying more at the pump is because of the
global energy crisis caused by the Iran war. The price of crude oil,
which is the main ingredient in gasoline, has been climbing for most of
the past two months because the Strait of Hormuz, the narrow passage of
the Persian Gulf through which a fifth of the world’s crude oil normally
passes, has effectively been shut, and oil tankers have been stranded
there unable to deliver crude.
Many drivers were hopeful in mid-April, amid signs that the conflict
could be winding down, and gasoline prices fell daily for almost two
weeks.
“After the announcement of the initial ceasefire, there was kind of
optimism that this really could be the beginning of the end of the
conflict,” said Rob Smith, director of global fuel retail at S&P Global
Energy. “And so crude prices came down correspondingly, gasoline spot
prices followed, and so on and ... the retailers lowered prices as
well.”
But as the war continued, gasoline prices reversed course and began
increasing again.
“There’s a fundamental shortfall that will exist globally or fundamental
struggle to meet that demand that will drive up price,” Smith said. “No
matter what a government says or what any market person thinks, there is
a true kind of upward pressure that’s being exerted on prices every day
the Strait of Hormuz is constrained. And it is still severely
constrained.”
Who sets gasoline prices
Gas station owners set prices at the pump, but a lot of factors go into
what they decide to charge.
The main ingredient in gasoline cost is the price of a barrel of crude
oil. In the U.S., oil prices represented about 51% of the price of a
gallon of gasoline in 2025, according to the Energy Information
Administration.
That means when crude oil prices rise, gasoline prices generally follow.
Less oil on the market means higher prices for oil and gasoline. And the
effective closure of the Strait of Hormuz triggered the largest supply
disruption in the history of oil markets, according to the The
International Energy Agency, pushing oil prices as high as $112 a barrel
in early April.
Bob Kleinberg, adjunct senior research scholar at the Columbia
University Center on Global Energy Policy, compared the average price of
a gallon of gasoline in the U.S. with the price for a barrel of WTI, the
U.S. benchmark oil, over the past few weeks, and said their price
changes generally matched up.
“Not much of a mystery here,” Kleinberg said. “It's not exactly
proportional but the shape of the curves follows the same pattern, and
really with very little delay.”
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Gasoline prices are displayed at a Mobil gas station on Wednesday,
April 29, 2026, in Portland, Ore. (AP Photo/Jenny Kane)
 Federal and state taxes contributed
about 17% of the oil price, refining costs and profits contributed
14% and distribution and marketing contributed 17%, the EIA said. In
some states, such as California, higher taxes and refining costs
push the price of gasoline well above the national average.
What caused renewed march in gasoline prices
One event that could have changed the trajectory of gasoline prices
occurred in April, when the U.S. blocked Iranian ports to stop the
country from exporting oil.
“Iran had been moving an unusually high amount of oil to global
markets, so that was helping moderate prices," said Jim Krane,
energy research fellow at Rice University’s Baker Institute. "The
Trump administration decides they’re going to punish Iran, and try
to put more pressure on Iran by blocking their exports, so of course
that does put pressure on Iran, but also puts pressure on global oil
prices and forces them up. That was probably a big factor.”
What refineries and traders are willing to pay for oil swings wildly
after news breaks about attacks on ships in the Persian Gulf or
diplomacy talks stalling. “The oil market is exquisitely sensitive
to what’s coming out of the White House,” Kleinberg said.
Back in early March, at the beginning of the Iran war, the price of
gasoline jumped 48 cents in a week. The highest weekly jump was in
March 2022, when the price jumped 60 cents in a week after Russia
invaded Ukraine, AAA said.
No quick fix
No one can predict how high gasoline prices will climb. A gallon of
regular in the U.S. costs more now than it did in early May of 2022,
and back then, the price kept climbing through Memorial Day, AAA
said.
The longer the flow of oil is constrained through the Strait of
Hormuz, the higher prices will go, and the longer it will take to
get back to normal, Smith said.
“Even if there was a true and lasting resolution of the conflict,
both sides agree to play nice and truly do commit to keeping Hormuz
open, it will still take months to get back to what it was pre-war,
if not even longer,” Smith said. “There will still be within the
industry a risk premium associated with going through that region.
Not that it was ever a perfectly safe journey, but the past few
months have shown that it’ll be hard to convince shippers and
insurance companies that the risk level will be similar to what it
was in February. It’ll be a long time before anyone can be convinced
of that.”
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