President Donald Trump told reporters on May 4 he expects gasoline prices to fall “very substantially” and “very rapidly” once the war with Iran ends, a prediction coming as U.S. pump prices climbed amid renewed hostilities in the Persian Gulf.
Speaking at a White House news conference, Trump said ships loaded with oil are “all over the world” and gasoline would plunge to levels “you’ve never seen” once the conflict is resolved. He reiterated an earlier remark from May 1 that prices would “come crashing down as soon as this war is over.” The comments come as Americans are already feeling higher costs at the pump: the national average rose to $4.48 per gallon on May 5, up from $4.18 the prior week, according to AAA. California drivers faced the highest average prices, as much as $6.13 per gallon on May 5, while Oklahoma reported the lowest at about $3.90.
Tensions in the region spiked on May 4 as Iran launched attacks on the United Arab Emirates and U.S. forces engaged Iranian small boats, sinking six vessels that Adm. Brad Cooper, commander of U.S. Central Command, said had been targeting commercial shipping near the Strait of Hormuz. Iran also conducted missile and drone strikes on the UAE that ignited a blaze at an oil facility and injured three people. The United States has described a parallel operation, dubbed “Project Freedom,” intended to reopen the Strait of Hormuz to commercial traffic.
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Energy market analysts say that while the U.S. produces more oil than any other country and imports relatively little from the Middle East, crude is a globally traded commodity. Disruptions to flows through chokepoints like the Strait of Hormuz — through which about a quarter of the world’s seaborne oil passes — can push crude and gasoline prices higher worldwide. Domestic factors also play a role: U.S. gasoline prices often peak between April and June as refiners switch to a costlier summer blend that performs better in warm weather.
The price motorists pay at the pump is shaped by several components, according to the U.S. Energy Information Administration: roughly half the retail cost reflects crude oil pricing, with refining and distribution making up most of the remainder, along with federal and state taxes. Diesel has a slightly different breakdown but is similarly sensitive to crude markets and refining costs.
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Trump’s optimism about an abrupt post-war plunge in retail gasoline diverges from more cautious signals from other officials and analysts. In recent weeks the White House has pulled back from firm timelines for relief at the pump, and Treasury officials have suggested gasoline could fall to about $3 a gallon this summer only if negotiations and operations reopen the Strait and oil flows resume quickly. For now, market watchers say the outlook remains heavily dependent on the course of the conflict, the success of diplomatic efforts, and how quickly global oil shipments can return to normal if hostilities end.
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