On June 30, with oil at $68 a barrel, President Trump told gas stations to cut their prices 'IMMEDIATELY,' warned that 'gauging' was 'totally illegal,' and pointed toward $2.50 a gallon [1]. Treasury Secretary Scott Bessent said retailers were 'making an extra margin' and 'probably had record profits' [1]. Three days later, the Justice Department and the FTC told state attorneys general that 'far too much' of the crude-price drop 'is being withheld from Americans' [3].
By July 16, the average gallon of gas was $3.94 and diesel had topped $5 [2]. The prices went up, not down toward $2.50 [2].
The reason the crackdown did not work is that it aimed at the wrong place. Crude oil did fall, but since the Iran war began it is up about 16 percent while gas and diesel are each up more than 32 percent - double oil's move [2]. When the pump price rises twice as fast as the barrel, the cause is downstream of the barrel, not at the wellhead [2].
Downstream is where the squeeze is. US refineries are running at 96 percent of capacity; roughly 30 Middle Eastern refineries have been damaged or destroyed in the war, taking about 2.1 million barrels a day of refining offline; US fuel exports are at record highs; gasoline inventories are at their lowest since 2012; and Russia, the world's second-largest diesel exporter, stopped exporting after Ukrainian strikes [2]. JPMorgan's chief commodities economist and other analysts describe the same refining-and-supply crunch [2].
None of that is a retailer withholding a discount, and none of it bends to a gouging threat [2]. Diesel above $5 a gallon is the fuel of trucking and the coming harvest, and it feeds straight into grocery prices [2]. The gas station is a convenient place to point; the price is being set at the refinery and the export terminal [1][2].
