Key Points:
- Energy observers predict that average US gasoline prices will remain above $3 per gallon for all of 2026.
- The “rockets and feathers” economic phenomenon refers to gas prices dropping much more slowly than crude oil prices.
- President Donald Trump acknowledged that Americans should expect high gas prices for a little while longer.
- Current national gas prices hover above $4 per gallon, up more than a dollar since the war with Iran began.
Drivers looking for relief at the gas pump will likely have to wait a very long time. Energy observers are increasingly acknowledging that gasoline prices will remain elevated for the foreseeable future. Experts warn this will happen no matter what happens in the short term regarding the closed Strait of Hormuz or the ongoing peace talks in the Middle East.
Rebecca Babin, a senior energy trader at CIBC Private Wealth, shared her blunt assessment this past week. She told Yahoo Finance that consumers will likely see those high prices remain incredibly sticky for much longer. She currently projects that average gasoline prices across the country will remain firmly above the $ 3-per-gallon mark for all of 2026. Babin believes this will remain true even if negotiators successfully open the critical strait completely by this summer.
Other prominent industry voices share this same prediction. Patrick De Haan from GasBuddy recently suggested that prices will stay high throughout the busy summer months. Even after factoring in positive diplomatic efforts to finally open the strait, De Haan expects summer gas prices to remain between $3.35 and $3.95 per gallon stubbornly.
The political reality is also starting to shift. President Donald Trump spent weeks completely dismissing the chances of long-term high prices. However, he finally acknowledged the difficult situation on Thursday. While speaking to reporters, Trump admitted that Americans should expect gas prices to remain high for a little while. He tried to soften the blow by claiming that overall energy prices had not spiked as much as he had initially thought. He defended his actions by pointing out that the high prices bought the world a major victory, specifically an Iran without a nuclear weapon.
This varied commentary provides a harsh reality check for everyday drivers. Crude oil prices and global financial markets remain highly volatile as regional developments change rapidly. For example, news broke on Thursday that Israel and Lebanon had decided to extend their temporary cease-fire, briefly calming markets officially. Meanwhile, everyday gas prices currently hover just above $4 per gallon in the United States, according to the American Automobile Association. That price sits more than a full dollar higher than it did before the devastating war officially began.
Any actual easing of gas price pressures will likely be incredibly slow and highly unsatisfying for drivers. This sluggish pace also creates a massive headache for Republicans facing angry voters during the upcoming midterm elections. The delay happens in part because of a strange historical phenomenon that top economists have taken to calling “rockets and feathers.”
The Federal Reserve Bank of St. Louis published a detailed paper explaining this concept back in 2022. They noted that crude oil prices and retail gas prices do not always move in tandem. When a massive global shock hits, prices often shoot upward together, acting like a rocket. However, when crude oil prices eventually ease and drop, refined retail gasoline prices sometimes drift down at a painfully slow rate, acting much more like a falling feather.
Economists use the formal term “asymmetric pass-through” to describe this frustrating phenomenon. It stems from a variety of complex causes. The main culprit is the natural time lag between when refiners physically purchase crude oil and when they finally sell their finished product to gas stations. Refiners and local gas stations also naturally want to preemptively protect their own financial bottom lines during moments of intense global uncertainty, so they keep prices high as a safety net.
In practical terms, this phenomenon means that everyday drivers are almost always the absolute last people to feel financial relief when massive oil shocks finally ease. This frustrating reality often exacts outsized political costs on whoever happens to be sitting in the Oval Office. Former President Joe Biden experienced this same problem in 2022 after Vladimir Putin’s massive invasion of Ukraine caused both crude oil and pump prices to spike violently. Pump prices stayed elevated for months, completely frustrating Biden and his political team.
A painfully slow decline in prices appears highly likely to repeat itself this time around. The frustrating delay could actually be amplified by the highly uncertain end to the current hostilities and by massive physical damage to critical oil infrastructure across the Middle East. Babin pointed to a variety of factors that could push the natural floor for gas prices much higher, especially since many countries will likely start aggressively stockpiling energy reserves to be safe.
Higher prices for a longer period would be incredibly frustrating for Trump and his political team. They have spent months promising the American public a quick drop in prices ever since the Iran conflict originally began. That potential frustration was on full display this past week. Last Sunday, Energy Secretary Chris Wright appeared on CNN and acknowledged the likelihood of higher prices, admitting that gas below $3 per gallon might not happen until sometime next year. The president quickly and publicly contradicted his own Cabinet member, telling The Hill in a Monday interview that he thought Wright was totally wrong on that prediction.
