After brief respite, gasoline prices continue their steady climb

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.”

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.”