Fifty-three percent and climbing
American drivers are paying $4.55 a gallon for regular gasoline, according to AAA's May 7 reading. That is up 25 cents from the week before, the second consecutive week with a quarter-dollar jump, and $1.40 more than the same date last year.
Before the first Iranian missile hit a tanker in the Strait of Hormuz on February 28, the national average sat at $2.98. Ten weeks later, pump prices have risen 53%.
Brent crude traded above $101 on Saturday. WTI closed at $95.42. RBOB gasoline futures, the wholesale benchmark that feeds into retail prices, sat at $3.36 a gallon. That leaves plenty of room for the retail number to keep climbing once station owners pass through the latest crude rally.
The Memorial Day question
Patrick De Haan, head of petroleum analysis at GasBuddy, said in late April that prices could reach $5 a gallon by Memorial Day and $6 later in the summer if the Strait stays closed.
"For now, those that are planning to road trip Memorial Day and into the summer may want to set aside a little bit more to fill their tank up," De Haan said.
Memorial Day falls on May 25, fifteen days away. AAA projects roughly 45 million Americans will travel that weekend, potentially a 20-year record. Most of them drive.
The all-time US record is $5.01, set on June 14, 2022, after Russia invaded Ukraine. At the current pace of 25 cents a week, the 2022 peak gets matched around May 21.
California already above $6
Regional gaps are wide. California drivers face $6.15 a gallon. Washington state is at $5.76. Hawaii, Oregon, and Alaska all top $5.25.
At the other end, Oklahoma holds the cheapest pump at $3.96, followed by Mississippi at $3.99 and Texas at $4.05. The coast-to-coast spread exceeds $2.20. A 15-gallon fill costs $33 more in Los Angeles than in Tulsa.
Inventories are thin heading into summer
The EIA's weekly report released May 6 showed crude stocks fell 2.3 million barrels to 457.2 million. Gasoline inventories dropped 2.5 million barrels. Distillate stocks declined 1.3 million barrels and sit 11% below their five-year average.
Refinery utilization was 90.1%, respectable but not enough to rebuild stockpiles ahead of peak driving season. Gasoline production ran at 9.6 million barrels a day against demand of 8.95 million.
Morgan Stanley warned in April that gasoline inventories could fall below 200 million barrels by late August if the Strait disruption continues. That would be the lowest level since 2014.
Consumers are already changing behavior
An Ipsos/Washington Post poll in April found 44% of American adults have cut back on driving. A third have modified vacation plans. Forty-two percent said they are reducing other household spending to afford gas.
The University of Michigan Consumer Sentiment Index dropped to 47.6 in early April, the lowest reading in the survey's 74-year history.
Jessica Rindels, an economist at Goldman Sachs, projected that the hit to real disposable income would slow consumption growth to 1.2% year-over-year, down from above 2% before the conflict. "The hit from higher gas prices tends to weigh in particular on spending on cars and discretionary goods," she wrote in an April note.
No relief unless Hormuz opens
Rob Smith at S&P Global Energy put it simply: "There is a true upward pressure being exerted on prices every day the Strait of Hormuz is constrained."
The Strait has been effectively closed for over ten weeks. Roughly 20% of the world's seaborne oil normally passes through it. Trump rejected Iran's latest counterproposal on May 10, and the oil market whipsawed $17 in four days this past week on deal hopes that evaporated almost as fast as they appeared.
Barclays raised its 2026 Brent forecast to $100 a barrel. If the disruption runs through end of May, the bank sees crude repricing to $110. At that level, $5 gasoline would be generous.
The Department of Energy does not project prices normalizing until 2027.