Oil prices returned to normal levels as the US military escorted commercial vessels carrying oil tankers in the vital Strait of Hormuz. But drivers still pay about $4 per gallon for gas.
President Donald Trump says oil companies are raising prices for their customers and has asked the Justice Department to look into the matter.
The average cost of a gallon of regular gas is $3.93, down about 13% from last month’s average of $4.52 per gallon. That’s still about 70 cents more than the price this time last year, when the average was $3.22 per gallon, according to AAA.
How does that compare to the movement of oil prices? According to the West Texas Intermediate benchmark, oil was trading around $70 per barrel on Wednesday – down more than 26% over the past month as US-Iran talks continued.
In a late-night Truth Social post, Trump said he was asking the Justice Department to “immediately begin looking into this.” Officials have not confirmed which companies will be investigated or when the work will be carried out.
“The big oil companies are not lowering their prices at the pump to match the very low prices they pay for Oil. Those prices are dropping like a rock! In other words, customers are being ‘screwed,'” Trump wrote. “Gas prices better start going down a lot faster than I can see!”
The president’s focus on gas prices comes four and a half months after the mid-term elections, with the majority of voters saying they disagree with the president’s handling of the economy in recent elections.
The oil and gas industry denies the price hike
The oil and gas industry says there is nothing unusual about the gap between falling oil prices and retail gas prices because it always takes time for pump prices to fluctuate in the oil market. Crude oil makes up about 57% of what drivers pay for regular gas, according to the Energy Information Administration.
In response to Trump’s call for an investigation into the price hike, the American Petroleum Institute said it supports the Trump administration’s goal of “bringing relief to the pump and restoring stability to the global energy market.” But as spokeswoman Bethany Williams told NBC News on Wednesday, “Gasoline prices are not keeping pace with crude oil, especially during a time of severe disruption around the world that is still disrupting supply, refining and supplies.”
Among economists, there is a saying that the price of gas “rises like a rocket and falls like a feather,” said Mark Zandi, chief economist at Moody’s Analytics, told Money earlier this year.
Iranian officials signed a deal on Sunday that sets out a path to an end to the war, but analysts warn that any escalation of Iran’s war could send oil prices back up. In a separate Truth Social post on Wednesday, Trump said he had Iran “on the ‘strings’ ready to go down, willing to give us almost anything.”
Oil traders were among the financial winners as energy prices rose during the Middle East conflict, according to Tom Kloza, an independent oil analyst. For example, Circle K’s parent company saw its margin grow to 52.4 cents per liter., an increase of 9.2 cents from last year, Kloza wrote in X.
But Trump is far from the first person to blame gas companies for rising prices, and it’s unclear how, if at all, the investigation could lead to relief for consumers.
Drivers in 19 states still pay more than $4 per gallon for gas. Prices are highest in Western states: A gallon of gas costs $5.54 in Hawaii and California, $5.30 in Washington, $4.95 in Alaska, $4.80 in Oregon and $4.73 in Nevada, according to AAA.
The case: Gas stations use a controversial AI tool
On Monday, a proposed class-action lawsuit filed in California accused Marathon Petroleum, Circle K, BP, Walmart, Speedway and other gas retailers of illegally using spy technology to fix government prices. The lawsuit alleges that gas stations use an AI pricing tool from Calibrate to “ensure that no matter where the driver turns, the price of gas is automatically high,” according to the complaint.
In its marketing materials, Calibrate, an analytics company founded in the UK, recommends to gas stations that even if “oil prices are falling… it is important to avoid a race to the bottom,” the lawsuit says, blaming the company’s AI tool for high prices in the state.
Meanwhile, gasoline prices fell below $3.50 per gallon in Indiana ($3.33), Texas ($3.38), Oklahoma ($3.43) and Tennessee ($3.47). You can see a full list of gas prices by country at gasprices.aaa.com
