Get Used to High Gas PricesNEWS | 04 August 2026Donald Trump’s approval rating is abysmally low for many reasons, but one of the most important is undoubtedly the price of gas. Trump’s decision in February to go to war with Iran sent gas prices soaring. Since then, the average price of gas in the United States has not dropped below $3.50 a gallon, even during the brief cease-fire that began in June. The resumption of the conflict a few weeks ago sent prices back above $4 a gallon.
That’s been very bad for Trump’s popularity—in a recent poll, roughly three-quarters of those surveyed blamed him (correctly) for the spike in gas prices. It’s also ominous for Republican prospects in the midterm elections, which are now fewer than 100 days away. The trouble is that even if Trump were to forge another cease-fire deal with Iran as soon as this week, the state of the oil market and the nature of gas prices mean that prices at the pump would keep Americans unhappy through November.
The stickiness in gas prices can be explained at least in part by the simple economics of supply and demand. The oil market, to begin with, is shakier than it was when the war first erupted. Back in February, global oil inventories were relatively high. China was able to cut its oil imports substantially, seemingly by drawing on its large oil reserves. The U.S. and Europe released hundreds of millions of barrels from their strategic petroleum reserves, in an attempt to soften prices. And traders seemed convinced that Trump would find a way to end the war once its economic costs got too high, which helped keep prices lower than they might otherwise have been.
Today, by contrast, global inventories have dwindled. The U.S. Strategic Petroleum Reserve is at its lowest level since 1983. And even though oil prices fell today following news of potential peace talks, the lack of those buffers and the need to rebuild those inventories mean that even if the Strait of Hormuz were soon reopened (which is a big if), oil prices would take a while to fall back to where they were before the war began.
Read: The great Chinese oil mystery
Other practical concerns will also keep gas prices high. Most notable, oil has to be refined into gas, and the war has taken a lot of refining capacity offline (as has Ukraine’s military response to Russia’s invasion). As a result, refiners in the U.S. are running at near-full capacity, and what’s called the “crack spread”—the gap between the price of oil and the wholesale price of its refined products, such as gasoline—has widened dramatically. That higher crack spread isn’t going away anytime soon, which will keep the price of gas elevated even if the price of oil drops.
But there’s another reason any improvement in the geopolitical situation would take a long time to filter through into dramatically lower gas prices: When supply shocks send oil prices rising, gas prices spike almost immediately. But when oil prices tumble back to Earth, gas prices take much longer to follow suit. As the saying goes, gas prices rise like rockets but fall like feathers.
We’ve seen this phenomenon at work this year. Oil prices peaked in May and then fell sharply. By June 24—after the U.S. and Iran had signed their memorandum of understanding—oil prices were down more than 40 percent from their peak. Gas prices, though, did not follow suit; instead, they dropped at a much more leisurely rate. On June 24, for instance, gas prices were down roughly 14 percent from their peak, prompting Trump to accuse oil companies of gouging customers and call for the Department of Justice to look into the possibility that companies were colluding to keep gas prices high.
Trump’s insistence that something sinister was keeping gas prices up is a common concern. Most people can understand why gas prices spike when oil prices jump. Gas stations raise their prices almost immediately because they’re charging based on anticipated replacement costs—what they will have to pay for their next shipment of gas. The reality is that gas stations’ profit margins drop when prices rise rapidly: If anything, they typically fail to raise prices swiftly enough.
The more complicated question is why the response is far slower when oil prices fall. There’s never been any evidence of explicit collusion, and in most parts of the country, there are enough gas stations to provide meaningful competition. So why, when oil prices tumble, don’t gas prices follow just as quickly?
Read: The ticking clock on the Strait of Hormuz
Economists haven’t reached a consensus answer. But the most convincing explanations focus on the fact that after prices have reached a new, higher plateau, drivers in effect get used to those prices (even if they’re unhappy about them) and become less diligent about searching out lower prices, which reduces the competitive pressure on gas stations. On top of that, people notice rising prices more than falling ones. When prices gradually subside, the amount people can save by seeking out the lowest-priced station is in many cases too little to justify the time and gas it takes to get there.
People may say in surveys that they’ll drive out of their way to save a few cents a gallon. But if that were true, you wouldn’t see the common phenomenon of two gas stations across the street from each other, and one charging 10 cents a gallon more than the other. In theory, drivers care only about price. In practice, they’ll make choices according to convenience or brand, even if a cheaper alternative involves simply crossing the street. And gas-station owners can take advantage of that by keeping prices higher than they otherwise could be.
Competition can still put pressure on charges at the pump. Meaningfully lower oil prices eventually filter through into meaningfully lower gas prices. But as a 2000 study by the Federal Reserve Bank of Dallas found, this period of adjustment can last longer than 16 weeks.
What that means is that even if the war miraculously ended tomorrow, gas prices would stay elevated until well after the midterms. Trump will get some help from seasonality—gas prices always rise in the summer and decline in the fall. But that seasonal effect is not large enough to mitigate the war premium that’s now baked in. Any Republicans who had counted on gas falling below $3 a gallon will almost certainly be disappointed. And there is little question about whom voters are going to blame.Author: James Surowiecki. Source
