U.S. Energy Prices and Tax Policy

Economists at Stanford’s Institute for Economic Policy Research estimate that the average U.S. household will spend about $740 more on gasoline this year because the Iran war has driven up global oil prices, nearly matching the Tax Foundation’s projection that the average individual tax refund will rise by $748 under President Trump’s One Big Beautiful Bill Act. Using an assumption that the Strait of Hormuz remains effectively closed for three weeks, they warn that higher pump prices could effectively swallow the year’s extra refund for many families. The analysis notes the "rockets and feathers" pattern in fuel markets, where prices jump quickly when oil rises but fall back only slowly, compounding the hit. Brent crude has climbed to nearly $111 a barrel, the U.S. benchmark is around $99, and AAA reports the national average gas price at $3.88 per gallon—96 cents higher than a month ago—as IRS data show average refunds at $3,676, up 11% from last year. The findings underscore how war-driven energy shocks can erase the perceived benefit of tax cuts in voters’ wallets, a dynamic already surfacing in social media complaints that refunds feel "gone at the pump" before they arrive.