Why Your Gas Prices Keep Going Up (Even When the War Pauses)

Gas Prices Are Climbing Again

Imagine you have a piggy bank, and every time something scary happens far away, you need more coins to fill your car. That’s kind of what’s happening with US gas prices.

• US gas prices shot up during the start-and-stop war with Iran.
• After a short calm period, the average gas price jumped 15 cents in just one week to $3.94 per gallon.
• Gas looks like it will go above $4 per gallon again soon.
• Diesel (the fuel trucks use to deliver your stuff) went back above $5 per gallon on Thursday for the first time in 3 weeks, says AAA.

Important: This is a painful reminder that a military conflict in the Persian Gulf (a area far from the US) can directly hit your wallet.

But It’s Not Just About the War

You might think: “War = oil expensive = gas expensive.” But it’s not that simple anymore.

• Rising fuel prices are not only because oil costs more.
• Gas and diesel prices have “taken on a life of their own.” That means they are now moving on their own, separate from what happens in the Strait of Hormuz (a narrow water path where a lot of oil travels) or US talks with Iran.

What Happened During the Calm Moments?

When the Strait of Hormuz was at least partly open for 3 weeks:

• Oil companies moved over 200 million barrels of crude oil (raw oil) out of the Persian Gulf.
• This briefly pushed oil prices below where they were before the war.
• Gas and diesel prices also dropped — but not anywhere near their pre-war levels.

Then, last week:

• A deal between Iran and the US (called a Memorandum of Understanding) fell apart.
• Oil prices jumped above $85 per barrel (they had been in the low $70s).
• This matters because crude oil makes up most of the cost of gasoline.

The Big Imbalance

Since the war started:

• Oil prices are up 16%.
• Gas and diesel are both up more than 32% — double the oil market’s jump.

Important: This huge gap is a little about trading stuff, but mostly about how oil gets turned into usable fuel (refining).

Why Refineries Matter

Oil by itself is not useful in your car. It must go to a refinery — a special factory that turns crude oil into gasoline, diesel, and jet fuel.

• Even when oil flowed out during peace moments, refineries couldn’t just flip a switch to use more.
• They already planned July production when the deal was signed, so they can’t quickly change speed.

During the war:

• Iran damaged or destroyed 30 Middle Eastern refineries.
• Global refinery output dropped by 3 million barrels at the worst point.
• 2.1 million barrels of refining capacity is still offline (not working), per JPMorgan’s chief commodities economist Natasha Kaneva.

Also far away:

• Ukraine used drone strikes to hit many Russian refineries.
• Russia (usually a big diesel seller) stopped exporting diesel and now buys it instead.
• This caused a global diesel shortage.

The US Refinery Situation

The US has the opposite issue — our refineries are working a lot:

• They ran at 96% of capacity last month.
• US refineries processed the most crude in the second quarter since 2019.

But:

• A record amount of US fuel is sent overseas:
  • Jet fuel → Europe
  • Diesel → Asia and Australia
• This helps the world, but leaves less for us.

Because of this:

• US gasoline inventories (stored gas) are at their lowest since 2012: 210 million barrels.
• That is only 20 million above “critical levels.”
• It’s just over 30 million above the lows during Hurricane Katrina, when many stations ran out of gas.

Important: Less fuel at home + more summer driving + farmers needing diesel for harvest = high prices.

Refineries Are Making Record Profits

• “Crack spreads” = the profit US refineries make turning oil into fuel.
• Gasoline crack spreads are up 60% from a year ago.
• Diesel and jet fuel crack spreads are more than double their 2025 levels (per the US Energy Information Administration).

One More Problem: Extreme Heat

Summer heat can make things worse:

• Refineries need cool temps to work well.
• They boil oil to separate it, then cool it to make gas, diesel, etc.
• If it’s too hot, they can’t make as much fuel.

Summary

US gas and diesel prices are rising fast, not just because of the Iran war or oil prices. Refinery damage in the Middle East and Russia, US fuel exports, low US gas storage, high summer demand, and extreme heat all play a role. Even when oil flows, turning it into fuel is the big bottleneck — and that’s why prices at the pump keep climbing.

FAQ

1. What is the Strait of Hormuz?
It’s a narrow waterway in the Middle East where a huge amount of the world’s oil travels by ship.

2. What is a refinery?
A refinery is a factory that turns raw crude oil into things we use like gasoline, diesel, and jet fuel.

3. Why are gas prices up more than oil prices?
Because many refineries were damaged and can’t make enough fuel, and the US is sending a lot of its fuel to other countries while our own supply drops.

4. What does “crack spread” mean?
It’s the profit a refinery makes when it turns one barrel of oil into fuel products like gas or diesel.

5. How does hot weather raise gas prices?
Refineries need cooler temperatures to efficiently make fuel; extreme heat slows them down, reducing supply and pushing prices up.