What Really Drives America’s Gas Prices

SITUATION:

Gasoline prices have climbed since fighting between the United States and Iran escalated earlier this year. The war began on February 28, 2026, when U.S. and Israeli forces struck first, hitting Iranian military, nuclear, and leadership targets in a single coordinated wave.

That opening strike killed Iran’s Supreme Leader. The Trump administration said the goal was to stop Iran from ever acquiring a nuclear weapon, and Iran retaliated within hours. The legality of that first strike remains disputed among international bodies and foreign governments to this day.

Iran’s retaliation targeted shipping through the Strait of Hormuz. That single waterway once carried roughly a fifth of the world’s oil and natural gas.

Brent crude, the international benchmark, jumped from around $70 a barrel to more than $120 during the worst stretch of the fighting. It has eased back somewhat since, though prices remain elevated and forecasters expect continued swings.

Oil companies have posted strong results throughout this same stretch of war. Shell’s second-quarter earnings alone reached $9.84 billion, the company’s best quarter since 2022.

That prior peak came during Russia’s invasion of Ukraine, when energy prices spiked this sharply. The pairing of record profits with painful pump prices has drawn attention in Washington, where Sen. Sheldon Whitehouse (D-RI), Rep. Ro Khanna (D-CA), and Rep. Brad Sherman (D-CA) have introduced bills taxing war-driven oil profits.

THE TRUTH:

The price at the pump is built from several layers. Crude cost is the largest one, typically well over half the total, with refining, distribution, marketing, and taxes making up the rest.

Understanding where that crude actually comes from clears up a great deal of confusion. The United States produces more crude than any other country, with 2026 output forecast around 13.5 million barrels a day, yet it still imports 6 to 8 million barrels daily on top of that.

Canada alone supplies about 60% of those imports. Mexico adds another 7% to 10%, and the two together account for the large majority of what the country brings in.

Persian Gulf nations, including Saudi Arabia, now make up only a shrinking slice of that total, a fraction of what they supplied decades ago. Much of what still arrives is heavier grade crude, used mainly for diesel, jet fuel, and industrial products rather than gasoline itself.

The underlying reason comes down to a mismatch between crude type and refinery design. American wells mostly produce light, sweet crude, while many refineries, especially along the Gulf Coast, were built decades ago to run something heavier.

That mismatch is why the country exports a real share of its own light crude even while importing heavier barrels to keep those refineries running at capacity. It is also why the United States has counted as a net petroleum exporter since 2020, despite still needing daily imports.

This distinction matters directly for the debate over expanding domestic drilling. Of the 13.5 million barrels produced daily, only about 4 million are exported as crude, while the remaining majority, close to 9 million barrels, gets refined right here at home.

A substantial share of that domestic crude becomes the gasoline sold at American pumps. New drilling reaches drivers two separate ways at once, directly through added refining supply and indirectly through added global supply, since exported barrels still help set the benchmark price gasoline is pegged to.

Federal subsidies for oil production exist regardless of party. Deductions for intangible drilling costs and the percentage depletion allowance have remained fixtures of the tax code across administrations of both parties for decades.

What has changed under President Donald Trump (R) is the pace and scope of drilling access itself. A meaningful share of that new access is not simply unclaimed federal land, but some of the most ecologically sensitive terrain the government controls.

The administration opened the entire 1.56 million-acre coastal plain of the Arctic National Wildlife Refuge to oil and gas leasing. That land had been off-limits for decades and serves as calving ground for caribou and habitat for polar bears and migratory birds protected under the Endangered Species Act.

A second reversal stripped protections from more than 13 million acres of the National Petroleum Reserve-Alaska. Wetlands around Teshekpuk Lake, considered especially fragile by wildlife groups, were among the areas affected by that change.

Both regions sit on land traditionally used by Gwich’in and Iñupiat Indigenous communities. Some of those communities oppose the leasing on cultural and environmental grounds, and multiple conservation groups have filed lawsuits arguing the moves violate federal wildlife law, with courts yet to resolve those challenges.

The administration has also drawn down the nation’s Strategic Petroleum Reserve to help hold down prices during the war. It authorized the release of 172 million barrels beginning in March, as part of a coordinated 400 million-barrel drawdown among 32 countries.

That release was structured mostly as oil exchanges requiring repayment with a premium, not outright sales. It still pulled the stockpile down to roughly 311 million barrels by mid-July, the lowest since 1983, and auditors have raised concerns about capacity for a future emergency.

Campaign finance records add useful context to the administration’s drilling push.

The oil and gas industry gave nearly $23 million to Trump’s 2024 campaign and allied committees, part of $219 million the industry spent overall trying to shape that election, with the bulk going to Republicans.

Biden’s own campaign received far less support from the same industry, somewhere between $537,000 and $635,000 total. That gap was already familiar from the prior cycle.

Trump’s 2020 campaign had collected about $14.9 million from oil and gas donors, up sharply from roughly $1 million in 2016. President Barack Obama (D) saw a similar pattern in 2012, receiving about $2.5 million against more than $10 million given that cycle to his opponent, Mitt Romney.

Obama’s full two terms brought in roughly $2 million total from oil and gas donors. Since 1990, more than two-thirds of all industry contributions nationally have gone to Republican candidates, a lean that has held for more than three decades.

WHY IT MATTERS:

Several separate stories tend to collapse into one whenever gas prices rise. A war-driven spike, a drilling policy, a stockpile release, and the oil market’s basic structure are genuinely distinct mechanisms, even when all four move prices the same direction at once.

Separating them is the only way to know which lever is actually doing the work behind a given headline. A war can dominate the news while a quieter policy decision does just as much underneath it.

Being a major oil producer does not shield American drivers from shocks overseas.

Crude is bought and sold on a single global market that does not stop at any border, and a conflict thousands of miles away can still raise what someone pays at a pump in Ohio or Texas.

Stockpile releases deserve to be judged on their own terms, separate from drilling policy entirely, since the two work in fundamentally different ways. Draining a reserve lowers prices temporarily using oil that already existed in storage.

New drilling adds oil that did not exist before, a genuinely different mechanism than tapping a stockpile. Treating a temporary release as proof that expanded drilling is already working makes the picture look more settled than the facts actually support.

Expanded drilling access was pitched as a way to raise supply and ease prices over time. There is a reasonable case that added production does exert some real pressure in that direction.

That case gets harder to make cleanly once a meaningful share of the newly opened land carries decades of legal and environmental protection behind it. That protection took years of litigation and public process to establish in the first place.

Record industry profits have arrived during this same stretch of higher prices at the pump, alongside heavy campaign contributions flowing from that industry to the administration expanding its drilling access. Readers are entitled to weigh whose interests the policy is primarily designed to serve.

None of this requires assuming bad faith on anyone’s part. Producers respond to global prices they do not set alone, and drilling policy, especially in legally contested terrain, takes years to show results either way.

Campaign contributions, long-standing subsidies, a drained emergency stockpile, and drilling pushed into protected land have all converged this year. That combination gives readers considerably more to weigh than any single headline about a war overseas ever could carry by itself.

SOURCES:

• CNBC: “Shell posts best quarterly profit in four years as Iran war boosts oil and gas prices” (July 30, 2026)
• The Associated Press via CP24: “Major oil companies reap massive profits as U.S. and Iran war drives energy prices higher” (July 31, 2026)
• Britannica: “2026 Iran war”
• Council on Foreign Relations, Global Conflict Tracker: “Iran’s War With Israel and the United States”
• U.S. Energy Information Administration: “How much petroleum does the United States import and export?”
• U.S. Energy Information Administration: “Oil and petroleum products explained: Oil imports and exports”
• Visual Capitalist: “Ranked: U.S. Crude Oil Imports by Country”
• The Conversation: “What’s at risk for Arctic wildlife as Trump invites bids for oil drilling in the fragile National Petroleum Reserve-Alaska”
• Earthjustice: “Trump Administration Offers Vast Tracts within the Arctic National Wildlife Refuge to Big Oil Drilling”
• CNBC: “U.S. Strategic Petroleum Reserve faces stress as emergency releases strain old infrastructure” (July 28, 2026)
• Semafor: “One of Trump’s key oil market fixes is about to break”
• Forbes: “Here’s How Much The Oil And Gas Industry Has Given To Trump” (May 10, 2024)
• Yale Climate Connections: “The fossil fuel industry spent $219 million to elect the new U.S. government” (January 3, 2025)
• Fortune/Bloomberg: “Oil and gas snubs Biden’s record production and profits, giving Trump millions for 2024 election” (February 9, 2024)
• OpenSecrets: “Oil & Gas: Background” and “Oil & Gas Summary” industry profiles