The national average price of regular unleaded gasoline hit $2.97 per gallon Monday according to AAA data — up 37 cents (14.2%) from the $2.60 average recorded on February 26, the day before the Iran conflict began. The increase marks the longest sustained run of weekly gasoline price rises since the early months of the Russia-Ukraine war in 2022, and AAA projects prices could breach $3.25 by Memorial Day if Brent crude sustains its current level above $110.
Regional variation is significant: California leads at $4.52 per gallon, followed by Nevada ($3.84), Washington ($3.71), and Hawaii ($3.68). The cheapest gas is in Mississippi ($2.58), Texas ($2.63), and Louisiana ($2.65). The Gulf Coast refining complex has been the primary beneficiary of the supply disruption, with crack spreads — the margin between crude oil and refined product prices — reaching $38 per barrel, more than double the $17 average in January.
Consumer Impact
The gasoline price increase represents an effective $45 billion annualized tax on U.S. consumers, according to JPMorgan economist Michael Feroli. Consumer sentiment, as measured by the University of Michigan survey, fell to 64.2 in April from 70.1 in March — with energy costs cited as the primary concern by respondents. Credit card spending data from Bank of America shows non-energy discretionary spending declining 2.1% month-over-month in April, the first negative reading since September.
Political Dimensions
Rising gas prices carry political significance with midterm elections seven months away. The White House authorized a release of 30 million barrels from the Strategic Petroleum Reserve in April, with limited price impact. Congressional pressure is building for additional SPR releases, though the reserve stands at just 372 million barrels — roughly half its 2010 peak. Energy Secretary Chris Wright testified last week that 'the SPR is not a tool for managing gasoline prices; it is a national security asset.'
Outlook
The trajectory of gas prices depends entirely on the Iran conflict's resolution. Goldman Sachs' base case projects a return to $2.80 per gallon by Q4 if diplomatic progress materializes by summer. Their bear case, assuming sustained Hormuz disruption, projects $3.50 by August and a measurable hit to Q3 consumer spending. Tuesday's AAA weekly update and Wednesday's EIA data will provide the next data points on the supply-demand balance in the domestic gasoline market.