Prixes for gasoline and diesel in the United States have more than doubled since the outbreak of conflict between the US and Israel against Iran in February. The surge has heavily impacted farmers, transportation companies, and everyday drivers. With midterm elections approaching, President Donald Trump has intensified efforts to curb fuel costs, though analysts question whether his available tools are sufficient to make a lasting dent before November.
The administration’s focus on affordability highlights a significant political vulnerability. Polls indicate that a majority of Americans disapprove of Trump’s management of the economy and the ongoing war, both of which are linked to elevated energy prices. Global oil supplies remain constrained because the Middle East conflict has disrupted flows through the Strait of Hormuz for months. Although crude oil shipments are nearing pre-war volumes, prices remain above $100 per barrel, sustaining high costs at the pump.
David Ruisard, a pricing manager at commodities intelligence firm Argus, noted that the Russia-Ukraine war also plays a major role. He estimated that 60% of the diesel price increase—from approximately $3 to $6 a gallon—is attributable to the Strait of Hormuz, while 40% stems from the conflict in Ukraine. Michael Pearce, chief US economist at Oxford Economics, stated that these energy costs are the primary driver of this year’s inflation, which in turn keeps interest rates elevated and squeezes household budgets.
In recent weeks, the Trump administration has employed several strategies to stabilize prices. This week, Trump announced a waiver allowing the use of “red dye” diesel on US highways. This fuel is normally taxed for off-road use only. However, experts warn of practical complications. The dye is difficult to remove from vehicle tanks, meaning trucking companies could face steep fines for tax evasion once the waiver expires. Additionally, diverting this supply could deplete reserves meant for industrial users like rail operators.
A more impactful move came last week when G7 nations agreed to release 100 million barrels of oil and diesel from strategic stockpiles following pressure from Trump. Patrick De Haan, head of petroleum analysis at GasBuddy, acknowledged that the announcement helped push prices down, even if the physical release is gradual. Pearce cautioned, however, that this is only a temporary fix. As long as Gulf energy exports remain disrupted, stocks will continue to drain, and the eventual need to refill them will keep prices elevated even after the Middle East crisis subsides.
Beyond federal actions, Trump has also encouraged states to reduce their own fuel taxes, with Ohio and Georgia complying. While state taxes represent a moderate portion of pump prices, suspending the federal gasoline tax would require congressional approval—a difficult feat ahead of midterms. Furthermore, such a move would be expensive; Indiana’s similar tax cut in May resulted in $1 billion in lost state revenue.
Trump has previously floated the idea of banning diesel exports to provide relief in the Gulf and Midwest regions. Yet Pearce warned this could backfire. Such a ban might lead to diesel stockpiling, forcing refineries to cut production, which would subsequently raise prices for other products, including gasoline. De Haan observed that the president has likely exhausted most minor policy levers, noting that meaningful price reductions ultimately depend on resolving the geopolitical tensions driving the crisis. Even if a diplomatic breakthrough occurs, Ruisard added that damaged facilities in the Middle East would require four to six months to return to normal output. Consequently, consumers and industry should expect high prices to persist for the foreseeable future.
Experts say four to six months minimum. Hope the midterms bring actual diplomatic breakthroughs then.
Wait, using red dye diesel on highways? That sounds like a fine waiting to happen for truckers.
Tax waivers are just band-aids. Until the Strait of Hormuz clears, prices won’t drop.