As the Strait of Hormuz remains blocked amid the fallout from war between the United States and Iran, the long-held notion of the "cheap-gas United States" is breaking down. Gasoline prices in the United States, the world's largest crude producer, have surged to their highest since 2022, when the Russia-Ukraine war began. In some places such as California, a bizarre situation has emerged in which the per-liter price at gas stations is more expensive than in Korea.
On the 6th, the American Automobile Association (AAA) said the U.S. national average gasoline price stood at $4.11 per gallon as of the previous day, up 86 cents in a month. Founded in 1902, AAA is the largest automobile club federation in the United States and has been a leading private tracker of pump prices since the oil shocks of the 1970s.
According to the tally, prices on the West Coast in particular have jumped sharply in recent days. As of the 5th, California's average gasoline price was $5.92 per gallon, and Washington, home to Seattle and other cities, was $5.37. Converted into won per liter, California's price is about 2,366 won. That easily tops Korea's national average gasoline price of 1,961 won per liter, posted the same day by Opinet. Average gasoline prices in major western U.S. regions such as Hawaii (about 2,233 won), Washington (about 2,149 won) and Nevada (about 1,997 won) have also become more expensive than in Korea.
The United States is the world's largest crude producer. Energy self-sufficiency may seem assured, but retail gasoline prices are determined more by taxes, environmental regulations, and logistics conditions than by output. For example, Mono County, California, home to the most expensive gas station in the country, is rugged and mountainous and isolated from nearby cities. On top of that, California applies its own stricter gasoline standard (CARB gasoline) than federal rules to reduce air pollution. Gasoline sold in California requires a more complex refining process and higher production costs than conventional gasoline. Citing experts, CNN said, "Even if overall U.S. crude output is ample, a shortage of refining capacity to turn crude into gasoline and differences in each state's tax policy make retail prices vary widely."
Also, because U.S. fuel taxes are low, pump prices are usually cheaper than in Korea, but the low tax share means swings in global oil prices are reflected directly at the pump. By contrast, Korea's higher tax share makes prices more expensive but provides a degree of cushioning. As a result, the United States has a "variable structure" in which price jumps are larger when oil spikes. This has also contributed to recent volatility in U.S. gasoline prices.
Soaring fuel costs are weighing heavily on the broader U.S. economy. Higher fuel prices have become an enormous logistics-cost bomb for corporations and consumers. Major companies such as global e-commerce firm Amazon and low-cost carrier JetBlue have begun imposing fuel surcharges across the board to survive. CNBC, a U.S. business outlet, said this amounts to "a kind of unavoidable war tax that U.S. corporations and consumers are paying."
As of the 7th, international oil benchmarks are trading well above $100 per barrel, around $110. Investment bank JP Morgan warned that if the Strait of Hormuz remains blocked until mid-month, the U.S. national average gasoline price risks breaking above $5 per gallon. That would approach the record high of June 2022. In most parts of the United States, the vast geography makes daily life difficult without a car. So a spike in fuel prices translates directly into a decline in household real income. If prices for everything from groceries to daily necessities start rising in step with fuel costs, consumer sentiment can quickly freeze. Experts said that if the burden of living costs intensifies and public sentiment sours ahead of the U.S. midterm elections in November, political pressure on President Trump will peak.
The Trump administration is likely to play its last card—releasing a large volume of Strategic Petroleum Reserve (SPR)—if U.S. gasoline prices pierce the psychologically important $5 per gallon level. Many expect preemptive action in late spring, before the summer travel season kicks into high gear. Some warn that while releasing reserves can prompt an immediate, temporary price drop, it is only a stopgap unless the fundamental causes—refining bottlenecks and military conflict—are resolved.
Neil Crosby, a vice president at the oil analysis firm Sparta, told PBS, "No matter how massive, an SPR release is like putting a small bandage on a wound." Without a diplomatic settlement that eases tensions in the Strait of Hormuz, the oil shock hitting the United States is unlikely to end soon.