Full Breakdown
Gas Price Surge from Iran Conflict Presses U.S. Consumers Across Dining, Travel, and Household Budgets
5/12/2026, 12:02:59 AM
Background & Context
The February 2024 war in Iran, which disrupted the Strait of Hormuz, pushed crude oil above $100 per barrel. The resulting national average gasoline price rose to $4.50-$4.56 per gallon, the highest level since 2022, according to AAA and the Bank of America Institute.
Data & Statistics
- Restaurant traffic fell 2.3 % year-over-year in March.
- Numerator survey: 43 % of drivers cut back on dining out.
- AAA projects 45 million Americans will travel >= 50 miles for Memorial Day; 39.1 million will drive (87 % of travelers).
- Lower-income households spent 4.2 % of income on gas in March (up from 3.9 %); 10 % spent > 10 % of income on fuel.
- Wage growth: lower-income + 1 % YoY, middle-income + 2 %, higher-income > 5 %.
Impact on Dining Out
John Peyton, CEO of Dine Brands Group, linked the March-April sales dip at Applebee’s and other value-oriented chains directly to gasoline prices above $3.50. Applebee’s responded with a $15.99 All-You-Can-Eat special. Chipotle reported a brief softening in late March but posted same-store sales growth for the quarter after the dip.
Impact on Memorial Day Travel
AAA’s forecast anticipates a record 45 million travelers despite high fuel costs. Driving remains dominant, while domestic flights are projected 6 % cheaper than a year ago—though flight pricing data were collected before the Iran conflict. Car rentals are 1 % cheaper; cruises are 14 % more expensive.
Household Financial Strain
Bank of America Institute data show lower-income households bear the greatest burden, with gas accounting for a larger share of limited discretionary income. Wage growth for these households was only 1 % YoY, compared with >5 % for higher-income families. Credit-card utilization remains modest, but buy-now-pay-later usage is rising.
Official Statements & Responses
- John Peyton (CEO, Dine Brands Group) said the restaurant slowdown is “attributable to gas prices specifically and the economy more generally.”
- Stacey Barber (Vice President, AAA Travel) noted that “travel demand remains strong, and despite higher fuel prices, many people are prioritizing leisure travel during holiday breaks.”
- Sean Duffy, U.S. Secretary of Transportation, promoted a five-part road-trip series, stating, “To love America is to see America.”
- David Tinsley, senior economist, Bank of America Institute, highlighted that “lower-income households spend more as a share of their income on gas just because they have less room for discretionary spending.”
- Nathaniel Sizemore, Department of Transportation spokesperson, defended Duffy’s series as unrelated to taxpayer funding and emphasized actions to keep gasoline affordable.
Criticism & Opposition
Former Transportation Secretary Pete Buttigieg called Duffy’s series “brutally out of touch.” California Governor Gavin Newsom labeled Duffy “a total disgrace” for focusing on a personal documentary amid safety crises. Citizens for Responsibility and Ethics in Washington (CREW) raised ethics concerns over industry sponsorship of the series.
Verbatim Quotes
- “March and April were softer than January and February, particularly with this value-oriented consumer that we saw staying home more often or dining at lower-cost alternatives, and we attribute that to gas prices specifically and the economy more generally,” — John Peyton, CEO, Dine Brands Group
- “Travel demand remains strong, and despite higher fuel prices, many people are prioritizing leisure travel during holiday breaks,” — Stacey Barber, Vice President, AAA Travel
- “To love America is to see America,” — Sean Duffy, U.S. Secretary of Transportation
- “I love a good road trip, but this is brutally out of touch: a Trump Cabinet member making a documentary about himself while regular families can’t afford road trips anymore, because Trump and his war put gas prices through the roof,” — Pete Buttigieg, former Secretary of Transportation
- “These are the same people who waged a war on fossil fuels, pushed gas to over $5 a gallon, and forced American families into expensive electric vehicles,” — Nathaniel Sizemore, Department of Transportation spokesperson
- “Lower-income households spend more as a share of their income on gas just because they have less room for discretionary spending than middle- and higher-income households,” — David Tinsley, senior economist, Bank of America Institute
Conflicting Reports & Gaps
Gas price figures vary slightly across sources ($4.50, $4.52, $4.56). AAA’s flight-price comparison uses data collected before the Iran conflict, creating uncertainty about current airfare costs. No longitudinal data were provided on the long-term effect of the price surge on restaurant profitability.
What’s Next
Analysts expect gasoline prices to stay elevated through the summer, potentially dampening discretionary spending and influencing travel patterns for upcoming holidays. Ongoing monitoring of restaurant same-store sales, AAA travel bookings, and household credit usage will gauge the broader economic impact.
