More than two months have passed since President Donald Trump’s tentative ceasefire with Iran broke down, yet American motorists continue to feel the pinch of stubbornly high gasoline prices at the pump. With the high-stakes midterm elections looming large on the political horizon, the president appears to have turned his full attention toward resolving the persistent fuel crisis. Over the past several weeks, the administration has rolled out a series of aggressive policy actions designed to secure more crude oil supplies from abroad and exempt domestic refiners from costly renewable fuel mandates.
Most recently, the administration summoned top oil refiners to the White House earlier this week for closed-door discussions aimed at finding immediate ways to lower retail prices for consumers. Despite the urgency of the meeting, the refiners departed without making any public statements to the press, and the White House declined to publish a formal list of the executives and industry representatives who attended the high-level talks.
In the months following the initial geopolitical disruptions and the blockade of the Strait of Hormuz, the global energy market has gradually found ways to conserve oil and reroute Middle East crude supplies through alternative channels. Nevertheless, deep structural factors continue to keep refined fuel prices stubbornly elevated. The national average for regular gasoline hovered around $4.11 per gallon on Thursday, representing an increase of more than 90 percent compared to the same time last year. Diesel prices have experienced an even steeper climb, placing a severe financial burden on shipping, logistics, and everyday consumers alike.
A primary driver of this market distortion is the "crack spread"—the crucial economic metric measuring the difference in price between raw crude oil and refined petroleum products like gasoline and diesel. This spread recently soared to an historic high of more than $70 per barrel. Energy analysts point to this unprecedented gap as a clear sign that the market for refined products is malfunctioning, with major oil companies reaping extraordinary profits as a result. Capitalizing on these soaring margins, the largest refineries in the United States have been operating at or near maximum capacity for several consecutive weeks, sustaining higher utilization rates for longer than at any point in recent history while actively deferring routine plant maintenance.
The president’s mounting frustration with high fuel costs has become increasingly apparent throughout the summer months. Speaking at an Oval Office briefing last month, President Trump did not mince words regarding the energy sector’s windfall gains. Based on a supply shortage, they are making too much money, the president argued, adding that energy companies ought to give some of those profits back to the public and take immediate steps to cut retail and consumer prices.
Despite the administration’s focus on crude supply, energy experts emphasize that the single biggest reason pump prices have remained exceptionally high is a severe global shortage of refining capacity—the specialized infrastructure required to convert raw oil into usable gasoline. During the height of the recent geopolitical conflicts, numerous refineries across the Middle East were forced to shut down operations. Simultaneously, critical diesel refineries in Russia were knocked offline as a direct result of Ukrainian drone attacks. The remaining operational refineries in North America and China simply lack the scale and capacity required to fill the massive supply gap left by these widespread outages.
In its initial efforts to alleviate the pressure on domestic consumers and lower prices at the pump, the Trump administration looked toward South America. Following the U.S. intervention in Venezuela in January—which involved the removal of leader Nicolas Maduro—the administration announced a comprehensive plan to revive the country’s moribund and long-neglected oil industry. While energy experts warned immediately following the raid that American corporations would remain deeply hesitant to invest in Venezuela’s volatile oil reserves, the administration has actively worked to make the region more palatable to foreign investors. These steps have included easing economic sanctions and pressuring interim leader Delcy Rodriguez to rewrite the nation’s restrictive oil laws to favor private enterprise.
These concerted diplomatic and economic efforts appear to be bearing fruit for the administration. Last week, the Pentagon formally announced that it would take an equity stake in North American Blue Energy Partners, a private Venezuelan company that currently controls approximately 20 percent of the nation’s total oil reserves. According to administration officials, the company plans to rapidly increase production in major oil fields that had previously been developed and drilled by Chinese and Russian state-backed enterprises. Alejandro Betancourt, the head of the company, has been characterized by some observers as a central figure in the administration’s Venezuelan strategy, with reports earlier this year indicating that the U.S. government helped him successfully avoid a pending criminal arrest warrant in Switzerland.
Furthermore, Chevron—the largest American energy corporation operating within Venezuela—announced on Wednesday that it intends to double its production levels in the country. The company formally signed a new operational agreement with the Rodriguez government during a high-profile ceremony at the Miraflores Palace in Caracas.
Local energy experts have offered a cautiously optimistic view of these developments, though they remain realistic about the timeline required for tangible economic impacts. In general, the read is positive, said Ramón Andrade, a business attorney and partner at the law firm Ponte Andrade & Casanova in Caracas. He noted that the domestic business community in Venezuela welcomes the prospect of a sector revival, but offered a note of caution regarding the details of the Pentagon deal, suggesting that analysts must carefully examine the final terms of what is actually signed.
Even with these sweeping developments, energy economists emphasize that increased production in South America has virtually no chance of reducing American gasoline prices, even in the period following the upcoming midterm elections. For one thing, only a limited number of specialized U.S. refineries are physically equipped to process the heavy, viscous crude oil extracted from Venezuela, and those specific facilities are already operating at absolute maximum capacity to exploit current high fuel margins.
Everything that the Venezuelans could produce right now, I am sure they are squeezing out, explained Al Salazar, an energy market analyst at Enverus Intelligence who closely studies global oil and gas supply chains. You could potentially get incremental production out of there in six to twelve months, but what is really causing the relentless gasoline and diesel price spike is the acute lack of global refining capacity.
Additionally, scaling up production from neglected fields will require a significant investment of time and capital, assuming the new legal frameworks and agreements with the Pentagon hold firm over the long term. The final implementation details of the agreements remain unavailable to the public, and various domestic political factions in Venezuela have already alleged that conceding the nation’s vast resource wealth to the United States constitutes a direct violation of the Venezuelan constitution. Furthermore, the interim government has yet to face the electorate in a genuine, democratic national election.
You need that long runway to be able to develop this resource properly, added Salazar, who spent decades working within the Canadian energy sector, which similarly manages heavy oil extraction processes comparable to those found in Venezuela.
As an alternative strategy to ease cost pressures, the administration enacted a separate major policy shift this week aimed at the domestic fuel supply. The Environmental Protection Agency announced it would end its stringent summer ethanol blending requirements ahead of schedule. Under normal regulatory conditions, federal rules mandate that fuel refiners and importers blend specific volumes of corn-based ethanol into the nation’s gasoline supply to help mitigate smog formation. The agency also announced a series of regulatory waivers designed to exempt several dozen smaller refineries across the country from having to integrate biofuels into their diesel and gasoline products.
The underlying purpose of the federal renewable fuels standard is to support American agricultural producers and curb greenhouse gas emissions, given that biofuels generally generate fewer planet-warming carbon emissions than traditional fossil fuels. However, many participants within the traditional oil industry have long argued that mandatory ethanol blending artificially drives up operational costs for refiners.
The EPA’s decision to grant these waivers immediately sparked fierce pushback from a broad coalition of stakeholders. Prominent Midwestern politicians and national biofuel associations argued forcefully that reducing blending mandates would severely harm American farmers by depressing commercial demand for corn. Meanwhile, even the American Petroleum Institute cautioned that sudden regulatory exemptions would create an unstable and unpredictable business environment for the refining sector as a whole. While proponents and opponents of the biofuel mandates debate whether the exemptions will effectively lower prices at the pump, market realities suggest that the ultimate impact on consumers remains uncertain. Because crude oil prices remain elevated, ethanol may represent a cheaper blending ingredient for some operators, and it remains unclear whether exempt refiners such as Marathon and Chevron will actively pass those input cost savings along to retail customers.
Even with the implementation of these regulatory waivers, average gasoline prices in numerous states remain roughly $1.50 above their pre-Iran conflict highs. The opening weeks of the geopolitical crisis centered heavily on the security of the Strait of Hormuz, but energy analysts warn that even if the vital shipping lane were to reopen tomorrow, the global gasoline market would remain fundamentally tight. Neither an influx of heavy crude oil from Venezuela nor cheaper blending inputs can instantly create the physical refining capacity required to normalize fuel markets.
I think it is going to have a tremendous impact; ultimately, prices are going to come down, President Trump told reporters during an Oval Office briefing on Monday. Will it happen before the election? I can not tell you that.
The persistence of stubbornly high fuel prices bodes poorly for the governing party’s prospects in the upcoming midterm elections. According to a comprehensive historical analysis of congressional elections conducted by Politico looking back to 1978, the president’s political party loses an average of 25 more congressional seats in midterm election cycles that follow significant spikes in retail gasoline prices compared to cycles where fuel prices decline.
Compounding these political and economic vulnerabilities, weather patterns in the energy-rich Gulf region present additional risks. Approximately half of the entire petroleum refining capacity in the United States is concentrated along the Gulf of Mexico, placing vital infrastructure directly in the historical path of Atlantic hurricanes. While meteorological forecasters have predicted a relatively quiet storm season overall, the potential for a massive weather-related outage remains a constant threat. Demonstrating this ongoing vulnerability, Tropical Depression Edouard formed in the Gulf of Mexico and passed directly over a major Texas refinery complex this week, though the system ultimately dissipated before intensifying into a major damaging storm.