Blog

“Big Oil” and Highway Robbery?

April 7, 2026
by David Simeone

Americans are tired of paying more for items they need to live on. Most of us would put the price of gasoline in that category. We can’t escape it – we deal with this every time that we go to fill up our car with gasoline – especially over the last month.

Are you truly paying too much for gasoline? That is somewhat of a subjective question but at its core, it is a legitimate topic that many don’t really know the details of – except when they pull out their credit card at the gas pump. But that is not the whole story.

Why Gasoline Prices Have Recently Increased

Gasoline prices have risen sharply in recent weeks, catching many drivers off guard. While it may feel sudden, the increase is the result of several interconnected forces—primarily driven by global events, not any single company or policy decision. Understanding what’s happening can help put the current environment into perspective.

1. Global Conflict Is Disrupting Oil Supply

The most significant driver of recent price increases is geopolitical tension in the Middle East, particularly involving Iran.

The region is a critical hub for global energy production
Oil exports have been disrupted due to conflict and damage to infrastructure
A key shipping route—the Strait of Hormuz, which carries about 20% of the world’s oil supply—is at risk¹

Even the threat of disruption can push prices higher, as markets react quickly to uncertainty.

The result: Oil prices have jumped from around from $65 per barrel to near $90–$100 in a short period.

2. Oil Prices Drive Gas Prices

More than half of what you pay at the pump comes from crude oil costs.²

When oil prices rise:

Refining costs increase
Wholesale fuel prices rise
Gas stations pass those increases to consumers

This is the single biggest factor behind rising gasoline prices.

3. The U.S. Doesn’t Control Gas Prices

Even though the U.S. is the world’s largest oil producer, gas prices are still influenced by global markets.³

Why?

Oil is traded internationally
The U.S. both imports and exports oil
Refineries are designed for specific types of crude

This means: When global oil prices rise, U.S. gasoline prices rise too—regardless of domestic production levels.

4. Prices Rise Quickly Because Markets Look Forward

One of the most frustrating aspects for consumers is how fast gas prices increase.

This happens because:

Gas stations price fuel based on replacement cost⁴, not what they paid previously
If future deliveries are expected to be more expensive, prices adjust immediately
Retail fuel is a low-margin business and station owners have to think about their next delivery, not their last one

This is why prices can jump quickly—even before higher-cost fuel arrives.

5. Prices Fall More Slowly (“Rockets and Feathers”)

While prices rise quickly, they tend to decline more gradually. Economists call this the “rockets and feathers” effect:

Prices shoot up like a rocket
Fall slowly like a feather
With less competitive pressure as prices fall, retailers lower prices more gradually

This reflects both market structure and consumer behavior. Producers – the companies that extract crude oil generally see a windfall when prices spike. Their costs don’t rise nearly as fast as the price of oil, so higher prices tend to flow directly to the bottom line.

6. It’s Not Just Gas—Oil Affects the Entire Economy

Gasoline is only one part of the story⁵.

When I worked in the chemical industry, all of our raw materials were derived from “oil”. We used to say oil goes into everything. Oil is used in:

Transportation (trucks, planes, shipping)
Manufacturing (plastics, packaging, goods)
Agriculture (fuel and fertilizer)

As oil prices rise, the effects spread to:

Groceries
Airline tickets
Delivery costs
Consumer goods

These increases in other areas of the economy often appear gradually over weeks or months.

7. Why the U.S. Is Impacted Differently

While Americans are feeling higher prices, the situation could be worse.⁶

The U.S. is far less dependent on Middle East oil than in the past
- Domestic production has reduced the risk of actual shortages

The key takeaway:

The U.S. faces higher prices, but not widespread fuel shortages
Other regions (especially Asia) face more severe supply risks

8. Taxes

I saved the worst for last. Taxes, the price paid for the privilege of driving on government roads (i.e. user fee). California levies the highest tax on gasoline at 70.9 cents per gallon (cpg). Environmental programs have the largest effect in California. Alaska has the lowest tax rate of 8.96 cpg. Pennsylvania has the fourth highest tax rate at 58.7 cpg.⁷ When gasoline prices go up, rarely does the public look at the second largest contribution to prices – the gasoline tax.

Drivers of electric vehicles don’t pay this tax – even though they use the same roads. Some states have begun charging the drivers of electric vehicles an additional fee to account for the revenue lost from the gas tax.

Putting It All Together

Gas prices are rising due to a combination of:

Global conflict reducing oil supply
Market reactions to risk and uncertainty
The global nature of oil pricing
Supply chain and refining constraints

Importantly: Contrary to popular belief, no single entity controls gas prices—they are the result of global supply and demand dynamics.

What This Means for You

Price increases often happen quickly, but broader inflation shows up more slowly
If oil prices remain elevated, expect gradual increases in other areas of spending
If geopolitical tensions ease, prices may decline—but likely more slowly

Bottom Line

Rising gas prices are not random—and they are not controlled by any one group. They are the result of a global system reacting to supply disruptions, risk, and economic forces.

Understanding that system helps explain why prices move the way they do—and why similar patterns tend to repeat over time.