Since the Trump administration joined Israel in starting a war of choice with Iran on February 28, oil prices have skyrocketed. The metric for the global price of oil—Brent Crude—rose as high as $119.50 per barrel about a week after hostilities broke out, the highest level since July 2022 in the wake of Russia’s invasion of Ukraine. Gasoline prices have followed suit, rising 64 cents compared with a month ago—a 22 percent increase. At a time when polls show that only 29 percent of Americans can afford basics such as rent, gasoline, and groceries without worrying about the cost, this reckless, needless, and unpopular war is causing prices at the pump to soar.
The Trump administration is reportedly looking for ways to lower energy prices for Americans, yet it is not pursuing some of the most obvious and impactful solutions, chief among them ending the war in Iran. The second Trump administration has been marked by actions that benefit oil and gas executives while making Americans more vulnerable to volatile energy prices, including gutting clean energy policies, blocking new renewable energy projects, and further subsidizing the oil and gas industry. The clearest solutions would result in lower profits for Trump’s donors in the oil and gas industry, who contributed more than $75 million to his campaign and to super PACs during the 2024 election cycle.
In response to concerns about high energy costs, President Trump told Americans that raised prices are a “small price” to pay in service of a war that has vague and shifting goals and which has killed seven American servicemembers and more than 1,300 Iranian civilians. This article reveals four actions the Trump administration could take if it truly cared about delivering lower gasoline and energy prices to Americans instead of increasing profits for the oil industry.
1. End the war in Iran
The war in Iran has effectively closed the Strait of Hormuz, a waterway vital to global trade and the movement of oil and gas. This has prevented one-fifth of the world’s oil and gas supply from reaching its intended destination, causing prices to surge. While the majority of oil that passes through the strait is bound for Asia and Europe, the fact that oil is sold on a global market means that shortages in those regions translate into price shocks for Americans and increased profits for the oil industry. Ending this war and reopening the strait is the quickest way to ease pressure on oil and, by extension, gasoline prices.
Yet even if the Strait were to reopen tomorrow, the damage sustained by oil producers in the region as a result of attacks on energy infrastructure could mean producers will be operating at a decreased capacity. Oil refineries in Saudi Arabia, Bahrain, Kuwait, Qatar, and the United Arab Emirates have all been targeted in Iranian retaliatory attacks. While the extent of the damage and impact on oil and gas supply is unknown, ending the war is the quickest way to restore normalcy to the energy markets and bring gasoline and home energy prices back down.
2. Restore tax rebates and fuel economy standards
Beyond immediate relief, the administration could also undo the damage it has already done to the country’s independence from the price volatility of oil. Specifically, it could reverse its elimination of federal rebates for electric vehicles (EVs) and the nullification of vehicle fuel efficiency and emissions standards. The Trump administration is unlikely to act on this proposal given the threat that affordable EVs and renewables pose to the oil, gas, and coal industries.
With the One Big Beautiful Bill Act, President Trump ended penalties for automakers not abiding by fuel economy standards and eliminated federal rebates for EVs. Fuel economy standards updated in 2024 were set to reduce gasoline consumption by almost 70 billion gallons through 2050—$243 billion dollars’ worth of consumption at the current average price of $3.48 per gallon. Taken alongside the rollback of EV rebates, these policy changes are anticipated to add between 25 cents and 37 cents per gallon to the cost of gasoline by 2035, forcing Americans to pay an additional $339 billion by 2035 to the very industry profiting from the crisis Trump has created. In addition, just last month the Environmental Protection Agency announced it was rescinding the nation’s standards for greenhouse gas emissions from vehicles. These standards were anticipated to reduce the need for oil imports by 2.1 million barrels per day, equivalent to 10.5 percent of the roughly 20 million barrels per day that regularly transit the Strait of Hormuz, a path that is now blocked by the war with Iran. This reduction in consumption would have saved Americans an average of $58 billion per year on fuel costs between 2027 and 2055.
These policy decisions made the country more dependent on oil and increased Americans’ exposure to price fluctuations caused by global crises. Instead of forcing Americans to pay more—$339 billion by 2035 and $1.1 trillion by 2055—the Trump administration should reinstate policies that reduce U.S. oil demand and shield Americans from price spikes.
3. Review export policies for oil and liquefied natural gas
The Trump administration’s war with Iran has dramatically spiked the price of natural gas, which if it persists would cause a spike in electricity prices that will be felt by ratepayers for years to come. To address this impending cost increase, the administration should reconsider the approval of new liquefied natural gas (LNG) export facilities. Exporting LNG increases the price of gas domestically by exposing consumers to a global market where they compete with all other consumers worldwide for supply and where they are subjected to price fluctuations caused by events outside of the United States. Since the United States began exporting LNG from the lower 48 states in 2016, residential gas prices have increased 52.64 percent. In 2024, the U.S. Department of Energy found that the unconstrained growth of LNG exports would increase household electricity and gas prices by a combined $122.54 per year.
Before 2015, the United States did not allow the export of crude oil. Since taking office, the Trump administration has pursued a strategy of aggressively increasing fossil fuel exports, including oil. While this approach will pad the profits of oil companies, it will also increase the exposure of Americans to spikes in the price of oil. With this exposure now driving a dramatic increase in the price of gasoline on the heels of the administration’s actions, some in Congress have begun calling for the reconsideration of some oil exports.
The cessation of new LNG and oil exports would begin to curb Americans’ exposure to global fluctuations in fossil fuel prices, felt through electricity rates and gasoline costs, but would also decrease the profits of the oil and gas companies. Trump should recognize that the affordability concerns of Americans are more important than the bottom lines of the multibillion-dollar oil industry and move to end new LNG and oil exports.
4. Institute a windfall profits tax with rebate
Circumstances such as these underscore the need for a windfall profits tax to ensure that oil companies cannot reap major financial benefits during a crisis at the expense of the American people. Such a policy would impose a tax on oil companies’ excess profits driven by oil price shocks, raising billions of dollars in revenue for taxpayers without increasing production costs or risking costs being passed on to consumers.
Given that crude oil prices are closely tied to many sectors of the economy, periods of conflict that put pressure on oil supply and raise prices for everyday Americans also benefit major oil corporations. For example, following Russia’s invasion of Ukraine, five oil and gas majors reported more than $1 trillion in total sales in 2022, leading to record-breaking profits—$195 billion in 2022 alone (220 percent above last year on average) and a total of $467 billion between February 2022 and January 2026. This windfall only serves to benefit corporate shareholders.
Recent legislative proposals have attempted to address this unfair corporate advantage. One bill introduced in the 117th Congress would have imposed an excise tax on windfall profits of the largest oil companies and returned the estimated $48 billion in revenue to taxpayers in the form of a $255 consumer rebate. Several European countries have also enacted windfall profit policies, returning billions of dollars of benefits to their taxpayers. There is no reason that corporate shareholders should be raking in record returns while American consumers struggle to afford basic necessities. Yet rather than support a policy that would make corporations pay their fair share, the Trump administration has handed the oil and gas industry a series of tax breaks and benefits that will only increase the profits they reap, while taxpayers receive no benefit.
Use of the Strategic Petroleum Reserve
On Wednesday, the International Energy Association announced that it’s 32 member countries, including the United States, would collectively release 400 million barrels of oil from strategic reserves. The move, including drawing from the U.S. Strategic Petroleum Reserve (SPR), an emergency supply of oil designed to mitigate price shocks, could flood the market with crude oil and provide immediate relief by lowering gas. Analysis of SPR withdrawals during both Bush administrations found that oil prices dropped an average of 19 percent within days of announcing a withdrawal, and prices remained 23.7 percent lower in the following six months. In 2022, the Biden administration’s release of 180 million barrels from the SPR following Russia’s invasion of Ukraine was estimated to have lowered gas prices by between 13 cents and 31 cents per gallon, despite criticism from congressional Republicans and the oil industry.
Despite hypocritically attacking Biden for tapping the SPR in response to Russia’s war in Ukraine, the Trump administration has signaled that it intends to use this tool. However, this alone is not sufficient to buffer this large of a supply shock if the conflict persists. This is especially true given that the strategic reserve is currently more than 40 percent below capacity thanks to the Trump administration’s failure to refill the reserve when oil prices were at a four-year low and when domestic production was high last year. Despite promising to “fill our strategic reserves up again right to the top” in his inaugural address, more than a year into his presidency Trump has presided over a modest increase of only 5 percent. By comparison, SPR levels were increased by more than 15 percent in the final year of President Biden’s term.
Why the Trump administration’s proposed solutions benefit Big Oil and Gas but fall short for Americans
The administration has implemented and proposed a handful of ideas to lower gasoline prices. These ideas, while ensuring oil and gas companies benefit from the collateral damage of the president’s war, fall well short of addressing Americans’ cost concerns:
- Sanctions relief on Russia finances the war in Ukraine. The Trump administration moved on Thursday to temporarily lift sanctions on Russian oil currently at sea. This decision will not actually create any new supply, but it does help finance a dictator engaged in active hostilities against a U.S. security partner, undoing years of effort to economically isolate Russian President Vladimir Putin. Moreover, spiking global prices from the war in Iran are enriching Russia.
- Waiving the Jones Act. The Trump administration is expected to temporarily waive the Jones Act, which requires all goods shipped between U.S. ports to be transported by U.S.-constructed, owned, and flagged ships. Waiving these requirements means that foreign-built and flagged ships would become eligible to transport oil between U.S. ports. The measure could have limited cost-savings benefits, decreasing East Coast gasoline prices by just three cents per gallon and could even raise costs on the Gulf Coast. It would also sideline American shipbuilders and workers and allow the oil industry to continue to profit from high prices while reducing transport costs.
- Increasing oil production will not isolate the United States from global price shocks. The administration has continued to tout its “drill, baby, drill” agenda as a solution and buffer to this crisis. Regardless of the situation, the United States will never be able to drill its way to energy independence. Increased leasing and permitting rates even beyond their current historically high levels will not change the fact that oil and gas are traded on a global market highly influenced by conflicts around the world. All it does is reinforce U.S. dependence on energy supplies that suffer from a high degree of price volatility for decades to come.
- Eliminating the gas tax will not benefit consumers. Trump administration has also floated lifting the federal gasoline tax. Hypothetically, this could cut up to 18 cents per gallon (the price of the tax), but historically these savings have not made their way to the consumer, as the industry often keeps a portion of the tax relief as profit. The tax is also essential for funding transportation investments, and even a short tax holiday could have big consequences for road and bridge repair and maintenance. Recent Democratic legislative effortsin this space, however, take measures to leave transportation funding intact.
Higher prices benefit Trump’s oil industry donors
Simple economics show that low gas prices are bad for Big Oil’s bottom line, while higher prices increase its total profits. The interests of the oil industry have always directly conflicted with the interests of hardworking Americans who want low prices at the pump. In fact, while the rest of the U.S. economy has taken a hit from Trump’s actions in Iran, oil companies have only benefited. Stock prices for major oil companies such as Chevron and Exxon Mobil jumped following the Trump administration’s attacks and, U.S. LNG exporters are set to earn nearly $1 billion per week from higher prices. These massive companies not only have the resources to navigate current supply disruptions, but their operations are also well outside of the conflict zone, allowing them to benefit from higher prices without risking their own infrastructure or exports.
This outcome is not unique to the situation in Iran: The only winners when fuel prices rise are the oil and gas companies that rake in billions of dollars in higher profits. The last time oil prices were above $100 during Russia’s initial attack on Ukraine in 2022, the oil and gas industry saw record-breaking profits. Those hundreds of billions in profits translated directly to massive stock buybacks and increased dividends for the wealthiest shareholders, while everyday Americans continued to suffer at the pump.
The Trump administration’s American “energy dominance” agenda celebrates the very policies that are exposing domestic prices to the international supply shock and vaguely promises that offering more public lands and waters for drilling will bring price relief. But despite the fact that U.S. oil production has more than doubled over the past 15 years, prices have not followed suit. On average, it takes more than four years for companies to begin producing oil on the lands they lease, and federal land giveaways will not affect current prices. In fact, a recent attempt to lease more than 1 million acres of waters off the coast of Alaska for drilling just last week turned up no interest from the oil industry, which is already producing at record levels.
Conclusion
By entering the United States into war with Iran, the Trump administration has signed Americans up for a war that most oppose and carries significant financial burden for households. Trump has brushed off Americans’ concerns about rising energy costs, claiming any increase in prices will be short-lived and worthwhile. Under the guise of providing relief for Americans, the Trump administration has proposed solutions that have negligible cost savings for Americans yet keep the oil and gas industry’s profits intact. The Trump administration should take necessary actions to bring energy prices back down immediately by ending the war in Iran and enacting sensible solutions that reduce dependence on volatile energy markets.
The authors would like to thank Trevor Higgins, Allison McManus, Andrew Miller, Frances Colón, Shannon Baker-Branstetter, Ryan Mulholland, Akshay Thyagarajan, Kalina Gibson, Colin Seeberger, Christian Rodriguez, Anh Nguyen, Laura Rodriguez, Emily Gee, Mike Williams, and Frederick Bell for their contributions to this piece.