Gas prices are dropping — but they're still high

Pain at the pump is easing, but gas is far costlier heading into the summer than last year — and what comes next is wildly unpredictable.

Why it matters: High gas prices are the most visible economic effect of the Iran war for many Americans grappling with https://www.axios.com/2026/05/28/consumer-spending-income-pce" target="_blank">inflation.

Driving the news: The U.S. average price for regular is $4.39 per gallon on Friday, per AAA — down 16 cents over the last week as the U.S. and Iran closed in on a https://www.axios.com/2026/05/28/iran-peace-deal-trump-approval" target="_blank">possible deal to extend the ceasefire.

• But it's still far above the roughly $3 that Americans were paying right before the war started.
• Prices are seeing their largest weekly drop of the year, Patrick De Haan, head of petroleum analysis at the fuel data and analysis firm GasBuddy, https://x.com/GasBuddyGuy/status/2060000821593481230" target="_blank">posted on X.

The big picture: Retail gas prices are tethered to oil prices set on global markets, even though the U.S. is the world's largest producer and imports https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_m.htm" target="_blank">relatively little from the Middle East.

• Gasoline is falling as oil prices — while volatile — have been trending generally lower since mid-May.

Yes, but: Don't expect a quick return to pre-war prices or anything close for the foreseeable future — and prices could rise again.

• Even if a U.S.-Iran deal becomes official, it's not clear whether tanker owners will feel confident enough to transit the Strait of Hormuz in large numbers anytime soon.
• And even if they do, the global market will remain tight for a long time — and the situation is getting even more dire as countries' stockpiles are drawn down.

"Following the clearance of any mines, a minimum of two to three months will likely be required to re‑establish steady export operations," the International Energy Agency said in its mid-May oil market report.

• Plus, Persian Gulf countries that cut production when the main export route closed will need to revive it — and it's not like flipping a switch.
• And oil prices include the potential for the fighting to start again, which is definitely not zero.

Zoom out: Other structural forces will act as a check on how much pump prices fall.

One is that U.S. fuel demand is higher in the summer.

• U.S. gasoline inventories https://www.eia.gov/petroleum/supply/weekly/pdf/highlights.pdf" target="_blank">fell again the week ending May 22, and are 6% below the five-year average for this time of year, the U.S. Energy Information Administration reported Thursday.
• "Gasoline storage has been down for 15 weeks in a row at a time of year when refiners usually stuff the motor fuel into storage in anticipation of summer driving season," Robert Yawger of the investment firm Mizuho Securities USA said in a note Thursday.

My thought bubble: If prices keep falling, it raises an interesting political question: How much will it matter to voters in the midterm elections if prices are going down, if they're still relatively high?

• It's relevant because analysts see prices https://www.axios.com/2026/05/07/gas-prices-iran-war-peace-deal" target="_blank">remaining above pre-war levels through the fall and beyond.

What we're watching: The White House has been pulling various levers to try to temper prices.

• Earlier this month, President Trump said he wanted Congress to suspend the federal gas tax.

  But there's little apparent movement on Capitol Hill.

• "It's something we might talk about.

  Let's see what happens over the next week or two weeks.

  A lot of good things are happening," Trump told reporters on Wednesday.