If you’re wondering Why Are Gas Prices So High Right Now, the answer starts overseas. 13The U.S. Energy Information Administration attributes the 2026 rise primarily to a sharp increase in crude oil prices, which make up about 57% of the retail price of gasoline. Crude jumped after U.S. and Israeli strikes on Iran beginning February 28, 2026 and Iran’s disruption of the Strait of Hormuz.
The Strait of Hormuz Chokepoint
A single waterway holds outsized power over global fuel. 9Because of the war in Iran, the Strait of Hormuz is currently blockaded. Very few ships are getting through,
which means very little oil is getting through, which means that the supply on the global market has squeeze. 9Twenty percent of the world’s oil flows through the Strait of Hormuz.
How High Have Prices Gone?
The pain at the pump is real. 14US gas prices surged past an average of $4 a gallon for the first time since 2022, as the war in Iran caused fuel costs to skyrocket globally. A map from AAA shows that the national average for a gallon of regular gasoline now stands at $4.02. 14California currently has the highest average,
sitting at $5.88 per gallon, while New Hampshire has the lowest average at $3.80.
The Deeper Structural Problem
Geopolitics isn’t the whole story. 12The Iran War was an incidental trigger,
but not the root cause of high gasoline prices in the U.S. There is a structural mismatch between the upstream (oil production) and downstream (refining) components of the supply chain. 12The nation’s aging refinery infrastructure is largely optimized for processing imported heavy sour crude,
forcing the nation to sell its abundant domestic light oil globally while purchasing heavy oil from abroad at international market rates.
What’s Next for Prices
Forecasts hinge on the conflict. 13The EIA’s June 2026 outlook forecasts retail gasoline averaging about $3.90 a gallon for 2026 — nearly a dollar above its February forecast — and easing toward $3.64 in 2027.
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