U.S. Gasoline Prices Slip as Hormuz Shipping Returns, Prompting Policy Push and Economic Debate

Nationwide, regular gasoline fell to $3.85 per gallon, down from $4.36 a month earlier and well below the $4.56 peak during the Iran-related supply shock. State prices range from $3.18 in Indiana to $5.47 in Hawaii and $5.43 in California.

Newsweek

Iran’s Feb. 28 closure of the Strait of Hormuz—through which ~20 % of world oil moves—spiked Brent crude above $120 per barrel and lifted U.S. pump prices to four-year highs. Resumed traffic has pulled crude back to $70-$73, easing gasoline.

Newsweek

National average sits between $3.85 and $3.93 per gallon. 67 % of surveyed households say recent gasoline hikes strain budgets. AAA projects 72.2 million Americans will drive 50 + miles during the July 4 travel week.

KMIR - NBC - Palm Springs

President Donald Trump urged retailers to cut prices “IMMEDIATELY” and target $2.50 per gallon, warning of “big problems” for firms. Justice Department called fuel affordability a national-security issue and opened a price-gouging probe. API’s Bethany Williams said gasoline prices lag crude and that the industry “shares the goal of delivering relief at the pump.”

Forbes

Torsten Sløk (Apollo Global Management) warned cheaper oil could revive demand, “overheat” the economy and push Fed to raise rates. Yale’s Abhi Gupta said oil softens inflation. Harvard’s James Stock noted falling pump prices may stall EV adoption and keep consumers in cars, firms in Texas, New Mexico and Oklahoma could see reduced investment.

Newsweek

Senator Ed Markey (D-MA) called the price environment “unacceptable” and blamed the Iran war for “skyrocketing” costs. Governor Gavin Newsom defended California’s fuel tax, citing state programs. Treasury adviser Kevin Hassett said Hormuz traffic normalizes, prices will revert to pre-war levels. Analyst Rory Johnston warned gasoline remains “near its tightest ever relative to crude.”

Benzinga

Sources list national averages of $3.85-$3.93 per gallon, reflecting different data cuts. Economists disagree on inflation, with some seeing demand-driven pressure and others emphasizing lower energy costs. No consensus on EV-sales rebound speed or oil-sector employment impacts.

Newsweek

• “The price of fuel is not only national security issue, it impacts the wallet of every American,” — Justice Department spokesperson

Newsweek

• “Our industry shares the goal of delivering relief at the pump and restoring stability to global energy markets.” — Bethany Williams, API spokesperson

The Cool Down

• “The narrative in markets is changing from ‘lower oil prices mean lower inflation’ to ‘lower oil prices mean more demand in an already overheating economy, which means higher inflation,’” — Torsten Sløk, Apollo Global Management

Newsweek

• “In addition to a "drag on production and employment in the oil and gas sector," Stock told Newsweek that falling prices could encourage consumers to stick with gasoline-powered vehicles, reducing pressure on manufacturers to transition toward electric models.” — James Stock, Harvard University

Newsweek

The DOJ’s price-gouging probe proceeds as administration pushes retailers to lower rates. Analysts expect further declines if Hormuz traffic stabilizes, but political pressure may rise before the November midterms. California’s planned fuel-tax increase could keep regional prices above the president’s $2.50 target, sustaining a national average above that level.

Forbes