Why gasoline prices fell but then started climbing again
AP News • • general
Key Points:
- The average price of regular gasoline in the U.S. surged 31 cents last week to $4.54 per gallon, marking a 52% increase since the Iran war began, primarily due to oil tanker disruptions near the Strait of Hormuz.
- The Strait of Hormuz, a critical passage for one-fifth of the world’s crude oil, has been effectively closed by Iran, causing significant supply constraints and driving crude oil prices up, which directly impacts gasoline prices.
- Gasoline prices briefly fell in mid-April amid hopes for a ceasefire, but escalated again as hostilities deepened, with experts noting a persistent global shortfall in oil supply while the strait remains constrained.
- U.S. gasoline prices closely track crude oil prices, with oil costs comprising about 51% of gasoline prices; additional factors include federal and state taxes, refining, and distribution costs, which vary by state.
- The U.S. blockade of Iranian ports in April further pressured global oil prices by limiting Iran’s oil exports, exacerbating the rise in gasoline prices, and experts warn that even a resolution to the conflict would take months to restore normal pricing due to ongoing risk premiums.
