Iran War Gas-Price Surge Projected to Offset Trump-Touted Tax Refund Gains for U.S. Households
With the Iran war cutting Gulf output (IEA estimates about a 10 million barrels-per-day decline) and much trade threatened through the Strait of Hormuz, analysts say administration moves — including a 172‑million‑barrel SPR release over 120 days, a limited draw rate and a 60‑day Jones Act waiver — are too small and slow to prevent gasoline from rising (national average $3.94/gal now; Stanford’s Neale Mahoney projects a May peak of $4.36/gal under a “rocket and feathers” path). Those higher fuel costs are likely to wipe out the Trump‑touted refund gains: the Tax Foundation projects an average refund increase of $748 while analysts estimate roughly $740 more in annual gasoline spending per household (IRS data show average refunds through March 6 at $3,676, only $352 higher year‑over‑year), and Oxford Economics says a $3.70/gal average would cost consumers about $70 billion—more than the roughly $60 billion in extra refunds—leaving many cash‑strapped households exposed.
📌 Key Facts
- President Trump ordered the release of 172 million barrels from the Strategic Petroleum Reserve on March 11, with flows scheduled over 120 days, but experts say the draw is too small and too slow to offset lost supply (U.S. prior maximum drawdown ~1 million bpd vs. the administration’s 1.4 million bpd goal).
- The International Energy Agency estimates Gulf countries have cut oil production by about 10 million barrels per day since the Iran war began, and roughly 20 million bpd normally transit the Strait of Hormuz—analysts say with that route effectively closed these measures cannot realistically return U.S. gasoline to roughly $3.50/gal in the near term.
- The administration announced a 60‑day Jones Act waiver to let foreign ships move fuel between U.S. ports; outside estimates suggest it might reduce gasoline prices by only around 3 cents per gallon, which analysts call 'too little, too late.'
- National average gasoline prices stood at $3.94 per gallon (as of the most recent Sunday report), up more than $1 from a month earlier; Stanford economist Neale Mahoney projects a May peak near $4.36/gal using Goldman Sachs oil forecasts followed by a slow decline (the classic 'rocket and feathers' pattern).
- President Trump touted that 'next spring is projected to be the largest tax refund season of all time' under his tax legislation, but IRS data through March 6 show average refunds at $3,676—only $352 higher than last year’s $3,324 so far and well below the Tax Foundation’s projected $748 average increase.
- Analysts quantify the offset: Neale Mahoney projects about $740 in additional annual gasoline spending for the average household (nearly matching the Tax Foundation’s $748 projected refund increase), while Oxford Economics estimates that if gasoline averages $3.70/gal for 2026 U.S. consumers would spend about $70 billion more on gas—exceeding roughly $60 billion in extra refunds.
- Economists and advocates warn the pain from higher fuel costs will be amplified because hiring has slowed, household savings are thinner, savings rates have fallen, and many families rely more on credit cards and 'buy now, pay later' to cover basics compared with the 2022 gas-price shock.
📰 Source Timeline (4)
Follow how coverage of this story developed over time
March 22, 2026
8:12 PM
Trump touted bigger tax refunds, but higher gas prices are likely to eat them up
New information:
- President Trump publicly claimed in a December prime-time speech that 'next spring is projected to be the largest tax refund season of all time' due to his tax-cut legislation.
- IRS data through March 6 show average refunds at $3,676, up $352 from $3,324 in 2025, which is so far below the Tax Foundation’s projected $748 average increase.
- The Tax Foundation estimates the average household refund increase at $748, while Neale Mahoney’s calculations, using Goldman Sachs oil forecasts, project about $740 in additional annual gasoline spending for the average household if prices follow a 'rocket and feathers' path.
- Oxford Economics estimates that if gasoline averages $3.70 per gallon for 2026, U.S. consumers will spend about $70 billion more on gas—more than the roughly $60 billion in extra tax refunds expected.
- Economists and advocates quoted note that, unlike in 2022’s Ukraine-driven gas spike, many households now have thinner savings, higher credit-card use, and are relying on 'buy now, pay later' to cover basics, amplifying the impact of higher fuel costs.
10:33 AM
Trump touted bigger tax refunds this year, but Americans will likely spend them on gas
New information:
- Confirms current national average gasoline price at $3.94 per gallon as of Sunday, up more than $1 from a month earlier.
- Cites Stanford economist Neale Mahoney projecting a May peak of $4.36 per gallon, using Goldman Sachs oil-price forecasts, followed by a slow decline — the classic “rocket and feathers” pattern.
- Quantifies the impact on the average household as roughly $740 more in annual gasoline spending, nearly matching the Tax Foundation’s projected $748 average increase in tax refunds.
- Updates IRS data through March 6 showing average refunds at $3,676, only $352 higher than last year’s $3,324 so far, indicating realized refunds may undershoot earlier projections.
- Reinforces Oxford Economics’ estimate that gas at an average $3.70 per gallon would cost consumers about $70 billion in extra spending, more than the roughly $60 billion in added refunds.
- Adds context that hiring is now nearly at a standstill, savings rates have fallen, and many households are depending on credit cards and ‘buy now, pay later’ to cover basics, weakening their cushion versus the 2022 gas-price spike.
March 20, 2026
7:49 PM
Are the Trump administration's efforts to lower oil and gas prices working?
New information:
- President Trump ordered the release of 172 million barrels from the Strategic Petroleum Reserve on March 11, with oil now beginning to flow and scheduled over 120 days.
- The International Energy Agency estimates Gulf countries have cut oil production by about 10 million barrels per day since the start of the Iran war, and about 20 million barrels per day normally move through the Strait of Hormuz.
- Experts say the SPR draw is too small and too slow relative to the loss of supply, with prior U.S. experience showing a maximum drawdown rate of about 1 million barrels per day, versus the administration’s 1.4 million bpd goal.
- Trump has ordered a 60‑day waiver of the Jones Act to allow foreign ships to move fuel between U.S. ports, with outside estimates that this might shave roughly 3 cents per gallon off gasoline prices—if anything—amounting to 'too little, too late' in analysts’ view.
- Analysts quoted argue that with the Strait of Hormuz effectively closed, these measures cannot realistically pull U.S. gasoline prices back to roughly $3.50 per gallon in the near term.