Washington should resist the urge to overreact to high gas prices

Unfortunately, there has been a sharp increase in domestic gas prices since the conflict with Iran started.

According to the Energy Information Administration, the national average price of regular gasoline is $3.502 per gallon for the week ending March 9, 2026, which is about 50 cents higher than the prior week when the price was $3.015 per gallon.

The primary cause: Iran is blocking the transport of oil through the Strait of Hormuz, which may be narrow in size but is extremely important when it comes to the global oil supply. About 20 percent of the global oil supply passes through this channel, with most of that oil going to Asia.

Since oil is a global commodity, the effect on prices when supply is reduced will be felt across the world, including here in the US.

Both Saudi Arabia and the United Arab Emirates have pipelines that can help export oil without going through the Strait of Hormuz, but this would only offset some of the lost supply.

Concern over gas prices should not be minimized. However, it is also important to understand current gas prices in context, which remain lower than many weekly prices during the Biden administration. Prices were often over $4 and reached a record high of over $5 in 2022. Note also that the Biden-era price increases above current levels lasted for a full two years, forcing hard-pressed drivers to pay more for every fill-up. And despite media reports, prices escalated during the Biden administration well before Putin invaded Ukraine.

As explained in this piece from 2022,

Retail prices for regular gasoline already had risen by 48% from the week ending Jan. 25, 2021 (when President Joe Biden took office), to the week ending Feb. 21, 2022 (three days before Russia’s invasion of Ukraine).

This does not mean the prices were not pushed even higher by the invasion, but much of it was likely due to President Biden’s attack on oil and constant signals to markets that the US was going to constrain supply.

Americans should have been upset over those ridiculously high prices during the Biden administration, and they are rightfully concerned about current prices rising to more than $3.50 a gallon.

The current price, though, is just a snapshot in time. There is currently no reason to believe this will be a long-term issue unless Iran can continue blocking the oil supply. In fact, at the time of drafting this article, the price of crude oil dropped significantly after it had briefly reached $120 per barrel.

Fortunately, the Trump administration has reversed many of the anti-domestic oil policies of the Biden era, which should put the US in a better position than it otherwise would have been in. Additional pro-domestic oil measures, including permitting reform, would help even more. But these projects involve multi-year timelines, while the options to immediately boost current output (and the capacity to refine it) are limited. Bottom line: stay the course on increasing domestic oil production and related infrastructure, but don’t expect overnight results.

However, there are still some things that can be done to help in the short-term.

In general, the federal government should continue to signal the importance of unleashing American oil and reducing governmental obstacles that restrict supply. Price concerns should be evaluated across the entire supply chain, from the transport of refined petroleum products by truck to the sale of gas at the retail level.

According to the Energy Information Administration’s latest calculation, 47 percent of the retail price of gas is attributed to the cost of crude oil. Therefore, more than half of the price is connected to other costs. Specifically, these costs include distribution and marketing (20 percent), taxes (17 percent), and refining (16 percent). These percentages can vary, but this is generally the usual breakdown.

Already, the Trump administration has committed $20 billion to insure vessels traveling through the Strait of Hormuz.

Other solutions reportedly floated to offset the higher prices include declaring a federal gas tax holiday and creating waivers for higher-priced summer blends of gasoline. The latter would only be of marginal help since, again, the problem is not with refineries themselves but with the higher price of crude oil. Simplifying refinery operations by relaxing the gasoline specifications would make only a modest difference.

Tapping the Strategic Petroleum Reserve (SPR) has become the go-to bad idea for some politicians. The SPR was originally designed as an emergency oil stockpile available for use when oil supplies to American refineries are disrupted. But right now, refiners are well supplied with mostly US and other North and South American oil, which hasn’t been affected by events in the Middle East. Simply put, it would be hard to find a refiner that has any need for additional oil.

Granted, oil prices are set in a global market and the extra supply from the SPR might suppress them, but only very slightly. As we have seen from past releases, the SPR doesn’t contain enough oil to significantly affect global prices for long and was never intended for that purpose. This is especially true after being drawn down to relatively low levels by the previous administration in its unsuccessful attempt to reduce pump prices. However, if the SPR is once again tapped in a futile effort to reverse recent price increases, it would be further depleted and even less available to serve its actual purpose of addressing any future supply shortages.

This is a fluid situation with no easy answers. Overreacting isn’t a solution, but neither is being complacent. The Trump administration is right to take the price spike seriously. To its credit, the administration’s prior and existing commitment to unleashing American energy has likely made the situation far more manageable.