Unleaded gas costs $4.09 a gallon at the Marathon Station on Point Street in Providence, Rhode Island, on April 30, 2026. (Photo by Christopher Shea/Rhode Island Current)
On paper it doesn’t make much sense. Ship traffic through the Strait of Hormuz, about 7,000 miles from the United States, is restricted and gasoline prices in the country are soaring?
According to strait data, the strait is the main export route for oil produced by Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Iraq, Bahrain and Iran. International Energy Agency. However, since February 28, when the Iran war began and the narrow passage between Oman and Iran became a battlefield, U.S. gasoline prices have skyrocketed and prices for consumer products and services have also increased.
According to the U.S. Energy Information Administration, most of the oil flowing through the strait goes to Asian markets. And because of greater domestic production, the United States imports less oil from the Persian Gulf than it has in 40 years. The EIA said in a March analysis.
So why do U.S. consumers pay so much more for gasoline? Globalization.
“Supply disruptions anywhere in the world could also impact prices around the world because we live in a global marketplace,” explained Jeff Lenard, vice president of the National Association of Convenience Stores trade group. “Oil and refined products such as gasoline are traded on commodity markets. Places with limited supply are willing to pay more for the product. This drives up the global price.”
Gas prices are tied to global supply and demand for crude oil, which means a supply disruption anywhere could have ripple effects everywhere, said Patrick De Haan, head of oil analysis at GasBuddy, which monitors gas prices.
“This is because the price of oil is based on the total availability of oil. As there is a shortage of oil from there, the rest of the oil around the world becomes more expensive,” De Haan said.
A gallon of regular gasoline cost an average of $4.52 on Monday, according to AAA compared to $4.14 a month ago and $3.14 a year ago. Overall, consumer prices rose 0.9% in March and have averaged 3.3% higher over the past year.
Considering prices
While Middle East oil supply disruptions are affecting prices around the world, retail pump costs can vary significantly from state to state throughout the U.S.
The average Monday in California was $6.16, the highest in the country, AAA reported. Next were Washington at $5.76 and Hawaii at $5.65. The lowest averages were in Oklahoma at $3.95, Mississippi at $3.98 and Arkansas at $4.
The price of crude oil accounts for the largest share of the price consumers pay at the pump. The EIA estimates that it makes up for this 51% of the retail price. Distribution and marketing account for 11%, refining costs and profits 20%, a federal and state taxes 18%.
This means that dramatic changes in oil prices have a huge impact on retail prices.
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National Association of Convenience Stores estimates that each dollar enhance in the price of oil could amount to 2.4 cents per gallon at the pump.
Brent crude oil, the global benchmark, was $70.50 the day before the United States and Israel attacked Iran. On Monday morning it was over $104.
An enhance of $34 a barrel since the beginning of the war would mean an enhance of 82 cents a gallon.
Competition can prevent excessive price increases. No gas station wants to be isolated and offer much higher prices than the one across the street.
Taxes and gasoline prices
There are other factors that affect gas prices, especially taxes, which vary from state to state.
Since 1993, the federal tax on gasoline has been 18.4 cents per gallon. President Donald Trump said Monday he supports freezing the tax, although he gave no timeline. A suspension would require congressional approval, and Republican Party leaders have been reluctant to agree to any pause in the past.
Although the average state tax is 33.55 cents per gallon, the amount varies greatly. California taxes and fees are estimated at 70.9 cents per gallon, the highest in the nation. The lowest tax and fee rate is 9 cents per gallon in Alaska.
Other factors also enhance California’s costs, including stringent environmental standards. The state requires a special blend of gasoline to improve air quality.
“This fuel burns cleaner, but is more expensive to produce because it requires more processing steps and expensive ingredients to mix.” – said the EIA.
Another reason for higher prices is California’s dependence on domestic refineries. It is not as far from interstate feeder pipelines as other states
Ripple effects
Before the war, about 20% of the world’s oil flowed through the strait. However, the reopening of the strait is unlikely to cause a sudden drop in prices.
“In complex supply chains, a disruption at one critical link, even a short-lived one, can cascade through the system well beyond the initial event.” Pinar Keskinocak– said in the analysis a professor at the School of Industrial and Systems Engineering. H. Milton Stewart at Georgia Tech. “As delays persist and worsen, it often takes a long time for interconnected systems to rebalance and return to normal.”
“I don’t expect an outright flood of barrels leaving the region,” said Jerome Dortmans, co-head of global oil and products trading at Goldman Sachs Global Banking & Markets, in analysis.
And if the Iran crisis continues and the strait remains restricted, we will likely face even more price pain.
“Prolonged disruptions in Middle East oil trading would create oil market conditions that are unprecedented in history,” the agency said in a March report nonpartisan Congressional Research Service.
