President Donald Trump touted the idea of Americans paying less than $3 a gallon for gasoline during his tariff rollout speech. And even while crude oil markets are slumping, costs for the fuel have remained stubbornly above that level and look set to remain that way — at least for now.
“Gasoline is way under $3, and people are beginning to be able to buy things and live again,” Trump told an audience in the White House’s Rose Garden Wednesday afternoon. But average US gasoline prices measured by the American Automobile Association were $3.26 a gallon as he delivered the speech, 13 cents higher than when he took office on Jan. 20. Gasoline hasn’t cost US drivers less than $3 a gallon on average since 2021, when the US economy emerged from the depths of the Covid—19 pandemic that decimated travel demand.
Trump’s new levies did, however, have an immediate effect on futures markets for fuel. Gasoline futures tumbled as much as 8.2% and diesel futures fell as much as 7% on Thursday as part of a broader rout. Crude futures in New York slumped as much as 8%.
Though oil prices are the biggest factor in the cost of producing a gallon of gasoline in the US, declines in the futures market don’t usually bring immediate relief to consumers at the pump, especially with peak demand season just around the corner.
Refiners get to decide how much of a discount they will factor into what are known as rack prices, the amount they charge fuel sellers like gas stations and wholesalers. Those producers and fuel sellers have little incentive to drop pump prices based on one day of trading in the volatile futures markets, especially since they’re now enjoying better margins. A more sustained decline for crude, though, could eventually trickle its way through into retail gasoline.
But meanwhile, the US is heading into peak driving season, which lasts from May’s Memorial Day holiday week through Labor Day in September, when Americans hit the road for summer vacations. Fuel demand and prices often rise in this period as demand increases and refiners switch to making a more expensive gasoline grade in the warmer weather to meet emissions regulations.
Some consolation for drivers is that fuel prices, while unlikely to fall below $3 for gasoline, are cheaper now than they have been in the last three years in the run-up to the summer. Gasoline prices on Wednesday, as Trump took the podium, were about 30 cents a gallon cheaper than the same day of 2024.