Iran War Gas-Price Surge and Volatile Oil Markets Projected to Offset Trump-Touted Tax Refund Gains for U.S. Households
President Trump's claim of record tax refunds — the Tax Foundation projects roughly a $748 average increase while IRS data through March show average refunds at $3,676 so far — is likely to be offset by an Iran‑war-driven surge and volatility in oil markets: Stanford economist Neale Mahoney projects about $740 more in annual gasoline spending (with a possible May peak near $4.36/gal), and Oxford Economics estimates roughly $70 billion in added U.S. gas bills versus about $60 billion in extra refunds. Administration measures — a 172‑million‑barrel SPR release over 120 days and a 60‑day Jones Act waiver that might shave only a few cents per gallon — are widely judged too small and too slow given IEA estimates of about a 10 million bpd drop in Gulf output and Strait of Hormuz disruptions, while retail pump prices typically lag crude moves and many households now have thinner savings and higher borrowing.
📌 Key Facts
- The International Energy Agency estimates Gulf countries have cut about 10 million barrels per day of oil since the Iran war began, while roughly 20 million bpd normally transit the Strait of Hormuz; analysts say with that disruption, U.S. measures cannot realistically push pump prices back to roughly $3.50/gal in the near term.
- President Trump ordered the release of 172 million barrels from the Strategic Petroleum Reserve on March 11, with oil scheduled to flow over about 120 days; experts say the draw is too small and too slow (past maximum drawdown ~1 million bpd vs. the administration’s 1.4 million bpd goal).
- The administration issued a 60‑day Jones Act waiver to allow foreign ships to move fuel between U.S. ports; outside estimates say this might shave only about 3 cents per gallon—too little, too late, in analysts’ view.
- National average gasoline was $3.94 per gallon (as of Sunday), up more than $1 from a month earlier; Stanford economist Neale Mahoney projects a May peak near $4.36/gal followed by a slow decline (the classic “rocket and feathers” pattern).
- The Tax Foundation projects the average household’s refund increase at $748 from recent tax changes, but IRS data through March 6 show average refunds at $3,676—only $352 higher than a year earlier so far—suggesting realized refunds may undershoot earlier projections.
- Analyses put the average household’s additional gasoline spending at roughly $740 per year if prices follow the projected path, nearly matching the Tax Foundation’s estimated $748 average refund gain.
- Oxford Economics estimates that if gasoline averages $3.70 per gallon in 2026, U.S. consumers would spend about $70 billion more on gas—exceeding the roughly $60 billion in extra tax refunds expected.
- Markets remain volatile and uncertain: Brent crude plunged 9.7% in one day to $101.26 after nearing $120 following President Trump’s public claim of “ongoing” talks with Iran; Iran’s parliament speaker denied any talks and accused Trump of manipulating markets, and retail pump prices typically lag crude moves by weeks so consumers have not yet seen any crude-driven relief.
- Economists and advocates warn many households are more financially vulnerable than in 2022—hiring is nearly stalled, savings rates have fallen, and more families rely on credit cards and “buy now, pay later”—amplifying the impact of higher fuel costs on household budgets.
📊 Relevant Data
Black and Latino households pay 13–18% more on average for energy per square foot of housing compared to White households in the US.
Race, rates, and energy insecurity: exploring racial disparities in electricity costs and consumption in US utility service areas — Nature Scientific Reports
Compared to non-Hispanic White households, Black households spend 43% more of their income on energy costs, and Hispanic households spend 20% more, with low-income households overall facing a median energy burden of 8.1% compared to 3% for non-low-income households.
Report: Low-Income Households, Communities of Color Face High 'Energy Burden' — American Council for an Energy-Efficient Economy (ACEEE)
Oil price uncertainty increases the total unemployment rate by 13 to 35 basis points, with the effect on Black and Hispanic unemployment rates being about twice as large.
Racial and ethnic disparities in unemployment and oil price uncertainty — Energy Economics
📰 Source Timeline (5)
Follow how coverage of this story developed over time
- As of day 24 of the Iran war, Brent crude has fallen 9.7% in a single day to $101.26 per barrel after nearing $120 last week, following Trump’s public claim of 'ongoing' talks with Iranian leaders to end the war.
- Iran’s parliament speaker publicly denied any talks with Washington and accused Trump of trying to manipulate markets.
- The article explains that, despite the sharp drop in Brent, consumer gasoline prices have not yet fallen because retail pump prices typically lag changes in global crude markets by weeks.
- 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.
- 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.
- 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.