Iran War Gas-Price Surge Projected to Offset Trump-Touted Tax Refund Gains for U.S. Households
Experts say Gulf output cuts and an effective shutdown of the Strait of Hormuz have removed millions of barrels per day of supply — the IEA puts the loss at about 10 million bpd — and the administration’s release of 172 million SPR barrels (to flow over 120 days), a limited drawdown and a 60‑day Jones Act waiver are too small and too slow to prevent a sustained rise in U.S. gasoline prices. That price surge would largely erase the benefit of Trump‑touted tax refunds: IRS data show average refunds up $352 so far (still below the Tax Foundation’s $748 projection), while analysts estimate roughly $740 in extra annual gasoline spending per household (and about $70 billion nationally), exceeding the roughly $60 billion in extra refunds and straining households with thinner savings and higher debt.
📌 Key Facts
- President Trump ordered the release of 172 million barrels from the Strategic Petroleum Reserve on March 11; oil has begun to flow and the release is scheduled to occur over about 120 days.
- The International Energy Agency estimates Gulf countries have cut oil production by roughly 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 — a disruption analysts describe as effectively closing the route and materially reducing global supply.
- Experts say the SPR draw is too small and too slow to offset the loss of supply: prior U.S. experience shows a maximum drawdown rate of about 1 million barrels per day versus the administration’s 1.4 million bpd goal, leaving a significant shortfall.
- The administration also issued a 60‑day Jones Act waiver to allow foreign ships to move fuel between U.S. ports, but outside estimates suggest this might shave only roughly 3 cents per gallon from gasoline prices and is widely viewed as 'too little, too late.'
- President Trump publicly touted 'the largest tax refund season of all time' from his tax legislation, but IRS data through March 6 show average refunds of $3,676, up $352 from $3,324 in 2025 — well below the Tax Foundation’s projected average increase of $748.
- The Tax Foundation’s estimated average refund gain of $748 is almost exactly matched by independent estimates of higher gasoline spending: Neale Mahoney’s calculations (using Goldman Sachs oil forecasts) project about $740 in additional annual gasoline spending per household under a 'rocket and feathers' price path.
- 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 — implying higher fuel costs could more than offset the refunds.
- Economists and consumer advocates warn many households now have thinner savings, higher credit‑card use, and greater reliance on 'buy now, pay later' to cover basics, amplifying the practical impact of higher gasoline costs and reducing the protective effect of larger refunds.
📊 Relevant Data
In 2026, Black taxpayers, who make up 13 percent of the population, are projected to receive only 8 percent of the benefits from extending the income tax cuts under consideration in a potential federal tax bill.
Two Ways a 2025 Federal Tax Bill Could Worsen Income and Racial Inequality — Institute on Taxation and Economic Policy (ITEP)
Black taxpayers are at least three times more likely than White taxpayers to be audited by the IRS, particularly for earned income tax credit claims, based on data from 2016-2020 analyzed in 2025.
IRS Must Better Address Racial Disparities in Audits, TIGTA Says — Tax Notes
Black households spend on average 6% of their income on combined home energy and auto fuel costs, which is about 10% higher than White households, according to 2024 data.
Low-Income Households Spend Nearly 20% of Income on Home Energy and Auto Fuel Costs — American Council for an Energy-Efficient Economy (ACEEE)
Structural factors such as housing quality and location contribute to racial disparities in energy burdens, with Black families more likely to live in rental properties where energy-efficiency upgrades are harder to implement, based on 2025 analysis.
Black families are the hardest hit by high energy costs — UPI
Rising gas prices in 2026 are projected to reduce U.S. households' real incomes by $15 billion per month, with low-income Americans most affected as their wages grew by only 0.6% compared to higher earners.
Surging U.S. gas prices could erase bigger tax refunds, analysis finds — CBS News
📰 Source Timeline (3)
Follow how coverage of this story developed over time
- 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.
- 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.