The president demands faster price drops at the pump, but supply-chain lags are a stumbling block
President Donald Trump ordered the Justice Department to look into gas prices and accused energy companies of price gouging.
President Donald Trump has his sights set on U.S. retail gasoline, calling attention to the disconnect between prices at the pump and falling oil futures.
Retail gasoline prices have fallen, and are likely to drop even more by the time the Fourth of July holiday comes around, as experts are quick to point out. They haven't dropped as fast as crude-oil prices, however.
That has more to do with a complicated web of seasonal gas-market quirks, refining margins and exports, and unabated demand. It also calls to mind a well-worn saying in gasoline markets: Prices rise like a rocket, and come down like a feather.
Trump late Tuesday said he ordered the Justice Department to look into why gas prices weren't tumbling, and accused energy companies of price gouging.
In remarks to the press later on Tuesday, Trump named BP $(BP)$, Chevron $(CVX)$, Exxon Mobil (XOM) and Shell $(SHEL)$ as companies on his radar, saying that they are sitting on "a flood" of crude and that retail gas prices should be much lower.
The companies did not immediately return MarketWatch requests for comments. Although energy companies, including the four mentioned by Trump, operate some gas stations directly, the vast majority are local businesses that buy their fuels and license their brands.
Last week, as hopes rose that the U.S. and Iran were close to their now-agreed cease-fire deal, the national retail average for one gallon of regular gasoline slipped under $4 for the first time since late March.
On Wednesday, the national average sat at $3.928 a gallon - about 50 cents cheaper than a month ago but nearly 80 cents more expensive than a year ago, according to AAA.
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That's actually "about as fast as it's typical in these situations," said Patrick De Haan, head of petroleum analysis at GasBuddy. "Rarely have [gas prices] fallen faster." Retailers are likely slower to pass along savings to make up for thinner margins when gas prices spiked in March and April, he noted.
The cost of crude oil is the largest part of gasoline's retail price, clocking in at about half the price of a gallon of gas. Federal and state taxes, marketing and distribution costs, and refining costs and profits make up the rest.
Seasonality, demand patterns, refining mismatches and refinery closures, along with the push and pull of economics, also factor into the price.
Where prices may be by Fourth of July weekend
Gas sold right now is the so-called summer grade - more expensive to make because it has to follow stricter antismog rules. If the same geopolitical scenario was playing out in the fall, prices likely would have fallen faster. The U.S. government has placed a waiver on some of the requirements, however, helping things on that side.
And U.S. gasoline inventories are well below seasonal norms, pointing to a tighter market. As the war with Iran dragged on, U.S. refiners responded quickly to immediate concerns about global stockpiles of jet fuel. They produced and exported the fuel at a record clip, but at the expense of their gasoline and diesel runs.
Even as crude-oil prices declined sharply from late-April highs -including a drop of nearly 20% in May - refined-product markets remained tight, said Matt Muenster, chief economist at transportation management company Breakthrough.
As disruptions caused by the Iran conflict intensified, seasonal demand also was building, and the U.S. summer driving season typically limits how quickly lower crude costs may translate into relief at the pump, Muenster said.
"At this stage, market fundamentals provide a more complete explanation than price gouging," he added.
Crude futures were looking at monthly losses of about 20% for June. New York-traded WTI futures (CL00) and London-traded Brent futures (BRN00) extended their string of losses on Wednesday, down about 4% each to $70.18 a barrel and $73.80 a barrel, respectively.
Wednesday's data from the U.S. Energy Information Administration showed a bump in U.S. gasoline inventories, but they still were more than 12 million barrels below the five-year average, said Denton Cinquegrana, an analyst with Dow Jones Energy. Moreover, "demand has been resilient despite higher retail gasoline prices," he noted.
There are also replacement costs to consider for gas retailers, as they have to wait until the more expensive gas from earlier deliveries is sold.
Refineries, for their turn, are processing crude bought weeks earlier, and pipelines, terminals and distribution systems are cycling through fuel produced before the oil price declines.
"The entire supply chain is working through existing inventories," said Brian Kessens, senior portfolio manager at Tortoise Capital. "What matters is not simply the magnitude of the crude-oil decline, but whether refiners can buy cheaper crude. Wholesale gasoline markets also decline and retail competition forces stations to lower prices."
What's increasingly clear is that consumers are likely to see more relief soon.
"There is a clear downtrend in retail gasoline prices that should continue over the next few weeks," Cinquegrana said. "I do think that by the Fourth of July weekend, prices will be in the $3.75-per-gallon area nationally."
-Claudia Assis -Myra P. Saefong
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June 24, 2026 17:25 ET (21:25 GMT)
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