The average price of gasoline in the United States surpasses $4 per gallon, reaching a new high since 2022.

Key Points

• The average price of gasoline in the United States has surged to more than $4 per gallon, rising by over 30% since late February, when the U.S. and Israel carried out attacks on Iran.
• At the same time, diesel prices have jumped by more than 40%, crossing $5 per gallon, with broad impacts on the U.S. economy.
• Vice President JD Vance said that the road ahead for gas prices is “difficult,” but he vowed that this round of increases is temporary and prices will fall after the war ends.
• Patrick De Haan, a GasBuddy fuel application analyst, said gas prices are certain to keep rising in the coming days.

U.S. gasoline prices broke above $4 per gallon for the first time in more than three years, as oil supply disruptions caused by the conflict in the Middle East are rapidly pushing up travel costs for American households.

Data from the American Automobile Association (AAA) show that the nationwide average price of gasoline is already $4.018 per gallon, the highest level since the August 2022 Russia-Ukraine conflict shock to the energy market. Since late February, after the U.S. and Israel took military action against Iran, gasoline prices have risen by more than 30%.

Last week, Lee Zeldin, administrator of the U.S. Environmental Protection Agency, told reporters at S&P Global CERAWeek energy conference in Houston that “we expect U.S. fuel supply to face possible disruptions.” To ease price pressure, the EPA is temporarily loosening parts of its regulatory requirements to increase gasoline supply.

Vice President JD Vance told consumers that in the coming weeks, gas prices will face a “tough situation.” He promised that this spike in prices is only temporary, and once the war is over, oil prices will fall.

On March 18, Vance said at an event in Auburn Hills, Michigan: “We’re aware of where the problem is, and we’re doing everything we can to solve it.”

Since the outbreak of the conflict, international oil prices have risen by more than 50%. International benchmark Brent crude is poised to post the largest single-month gain since the introduction of futures contracts in 1988, while U.S. crude is set for its strongest single-month increase since 2020.

David Doyle, chief economist at Macquarie Group, expects that in March, the U.S. average monthly gasoline price will rise by 25% versus February. In a report to clients dated March 25, he said this would mark the largest monthly increase since October 1990.

Diesel Prices Soar

Meanwhile, diesel prices on March 17 broke above $5 per gallon, up more than 40% compared with before the outbreak of the conflict. Diesel is a major fuel for trucks and freight trains transporting goods, and the price increase will trigger broad ripple effects across the U.S. economy.

Andy Lippeau, president of Lippeau Petroleum Consulting, said in a March 20 report to clients: “Consumers have already felt the shock from higher gasoline prices and the way higher aviation fuel is pushing up ticket prices.”

“But the full impact of diesel price increases has not yet emerged; over the next few months it will gradually transmit throughout the entire economic system.”

Patrick De Haan, head of oil analysis at GasBuddy, said that by April, consumers will feel the effect of rising prices in both supermarkets and online orders. The analyst said on March 20: “This will quickly trigger a new round of inflation.”

Last week, U.S. Energy Secretary Chris Wright told CNBC that the government has plans in place to increase diesel supply.

During an interview with CNBC reporter Brian Sullivan in Houston, Wright said: “When it comes to diesel supply, we already have measures in place—we can put additional diesel into the market, and we believe it will be implemented soon.”

The main reason for the oil price surge is that Iran’s attacks caused a sharp drop in the volume of oil tanker shipments through the Strait of Hormuz. The strait is the world’s most important oil export shipping route; before the conflict broke out, about 20% of global oil supply was transported through it.

Because the Strait of Hormuz is effectively closed, oil producers in the Gulf with production in Arab countries have run out of storage capacity for crude oil and have been forced to cut output. The International Energy Agency said this has led to the worst oil supply disruption in history.

Trump Administration Response Measures

The Trump administration has rolled out multiple measures to tamp down oil prices, but given the massive scale of supply disruptions, it remains unclear whether these steps can relieve consumer pressure. Analysts say that only if the Strait of Hormuz resumes oil transportation could oil prices potentially fall.

De Haan said: “The policy tools the president can use are actually very limited.”

The U.S. Environmental Protection Agency has temporarily loosened restrictions on sales of E15 blended gasoline containing 15% ethanol. Because of regulations related to air pollution, roughly half of the states in the U.S. ban the sale of E15 gasoline in summer.

Zeldin said the waiver will take effect on May 1, will run through May 20, and may be extended.

On March 25, the EPA administrator told reporters in Houston: “We will continue to monitor supply conditions with the industry and federal partners. If the issue persists, the agency will be ready at any time to extend the emergency fuel waiver period.”

The U.S. is releasing 172 million barrels of crude oil from strategic petroleum reserves—one of the coordinated joint actions by more than 30 countries to put 400 million barrels of oil into the market in response to supply shocks.

Trump also announced a temporary waiver of the strict shipping provisions of the Jones Act for 60 days. The law requires that cargo shipments between U.S. ports must use U.S.-flagged vessels; this waiver would allow foreign-flagged vessels to transport oil and gas within the United States, which is expected to reduce shipping costs.

De Haan said the Jones Act waiver will help gasoline reach the U.S. West Coast and Northeast regions, but it will have limited impact on other areas.

The U.S. Congress could suspend the federal fuel consumption tax. Lippeau said this would save consumers about 18 cents per gallon of gasoline and 24 cents per gallon on diesel.

De Haan warned that if the parties cannot resolve the transportation bottleneck at the Strait of Hormuz, gasoline prices could reach the historical high of $5 per gallon. He said: “At its core, it’s a race against time.”

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Editor: Guo Mingyu