High gasoline prices have persisted more than two months after a ceasefire with Iran collapsed, becoming a focal point for the Trump administration as midterm elections approach. The U.S. average gas price stood around $4.11 per gallon on Thursday, representing a roughly 90 percent increase year-over-year, with diesel prices climbing even higher. A historic spike in the crack spread—the difference between crude oil and refined fuel prices—to over $70 per barrel indicates that refined product markets are experiencing significant disruptions, enabling oil companies to generate substantial profits.
The administration has pursued several strategies to address the issue. Most prominently, it has sought to revive Venezuela’s oil industry following the capture of leader Nicolas Maduro in January. Efforts include easing sanctions, negotiating favorable terms with interim leader Delcy Rodriguez, and facilitating Pentagon investment in Venezuelan oil reserves through North American Blue Energy Partners. Additionally, Chevron announced it would double its Venezuelan production following an agreement signed in Caracas. The administration also met with refiners at the White House earlier in the week, though the meeting produced no public statements or attendee lists.
In a related move, the Environmental Protection Agency terminated summer ethanol blending requirements ahead of schedule and granted exemptions to dozens of refineries from renewable fuel mandates. The Trump administration argues these steps will help lower consumer fuel costs, though officials have expressed frustration with refiners, suggesting they retain excessive profits from supply constraints.
However, analysts indicate these measures face significant limitations. The core issue driving sustained high prices is insufficient global refining capacity, exacerbated by Middle Eastern refinery shutdowns related to regional conflict and Russian diesel refinery damage from Ukrainian drone strikes. Most U.S. refineries currently operate near maximum capacity and have deferred maintenance to capitalize on elevated prices. Venezuelan crude, while potentially helpful, requires specialized refining infrastructure that is already operating at full capacity. Industry experts estimate that meaningful Venezuelan production increases would require six to twelve months to materialize and potentially many years for full development, creating doubt about price relief before the midterms.
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