With the US midterm elections approaching, President Donald Trump has intensified efforts to lower fuel prices, which have more than doubled since the conflict between the US, Israel, and Iran began in February. The rising costs of gasoline and diesel are affecting transport businesses, farmers, and everyday drivers, amplifying concerns over affordability. Trump’s recent announcements, including a waiver on the use of red dye diesel, aim to provide temporary relief, but analysts question their effectiveness.
The surge in fuel prices is largely attributed to disruptions in global oil supplies, particularly the halt in oil flow through the Strait of Hormuz and the ongoing Russia-Ukraine war. David Ruisard, pricing manager for Argus, estimates that 60% of the price increase is linked to the Strait of Hormuz, while 40% is due to the Russia-Ukraine conflict. Higher energy prices have contributed to inflation, squeezing household budgets and increasing firms' costs.
Among Trump’s measures, the allowance for red dye diesel to be used on highways without federal taxes has faced criticism. Ruisard points out that removing the dye from fuel tanks is difficult and could lead to fines for tax evasion. Another move, the release of oil from the Strategic Petroleum Reserve, has had a modest impact on lowering prices, though analysts warn it is only a temporary solution.
Trump has also considered suspending federal taxes on gasoline and urged states to cut their own gas taxes, with some states like Ohio and Georgia already doing so. However, suspending federal taxes would require congressional approval, which may be challenging ahead of the elections. Economists caution that without resolving the geopolitical tensions in the Middle East and Ukraine, fuel prices are likely to remain high for the foreseeable future.