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Fuel prices have increased faster in the US than in any other G7 country since the Iran war began, dealing a blow to American consumers and upending Donald Trump’s efforts to tame inflation.
US petrol prices at the pump have jumped 42 per cent since the days leading up to the war in late February, according to JPMorgan.
The next highest increases in G7 countries were recorded in Canada and the UK, with prices up 24 per cent and 19 per cent respectively. In Italy prices have risen 4.6 per cent.
Only a handful of Asian countries, such as Myanmar, Malaysia and Pakistan, have faced a faster increase in petrol prices because of physical supply shortages that have sent pump prices soaring more than 50 per cent, the Wall Street bank told clients on Friday, referencing data from Globalpetrolprices.com.
“The most immediate physical disruption has been felt in south-east Asia, given the region’s heavy reliance on flows through the Middle East,” said Natasha Kaneva, an analyst at JPMorgan. “Somewhat counter-intuitively, the US has emerged as the second most affected region in price terms.”
Average petrol prices jumped 9 cents on Friday to $4.39 a gallon, the highest since 2022 following Russia’s full-scale invasion of Ukraine and up from $2.98 prewar, according to the motoring group AAA. In California motorists are paying $6.06 a gallon.
The surge in prices comes weeks before the start of the summer driving season, which begins on Memorial Day in late May.
Despite the recent price surge in the US, most American consumers pay less than their counterparts in G7 countries. The average price of a litre of petrol in the US was $1.17 while Canadians pay $1.43 a litre and British motorists pay $2.12, according to Globalpetrolprices.com.
Analysts said the faster pace of price increases in the US reflected the fact that governments in other parts of the world impose much higher taxes on fuel, which means swings in crude prices have more influence on American pump prices. Some governments have also introduced subsidies or cut taxes to cushion the impact of rising fuel prices on consumers since the Iran war caused an energy price shock to spread across the world.
“In the US it’s the consumer bearing the cost, whereas in other countries the state is doing more to absorb the additional cost,” said Edward Hayden-Briffett, a research analyst at The Officials, a division of Onyx Capital Group.
He said record exports of crude and petroleum products from the US to Asia were also putting upward pressure on domestic retail prices, as inventories fall during a period of rising demand ahead of the US driving season.
Surging US fuel prices and rising inflation threaten to derail Trump’s presidency ahead of the pivotal November midterm elections, with his approval rating falling this week to the lowest level of his current term at 34 per cent, according to a new Reuters/Ipsos poll.
Trump vowed on the campaign trail to unshackle US oil companies from regulations to enable them to “drill, baby, drill” and drive petrol prices below $2 per gallon. But his decision to attack Iran has done the opposite, triggering an energy shock that has pushed up fuel costs across the US.
US oil supermajors ExxonMobil and Chevron on Friday said they would refrain from increasing production beyond their existing plans despite the rise in oil prices.
US prices for other refined products are also rising faster than in most G7 and Asian nations, some of which are facing direct supply shortages because of the Iran war, according to JPMorgan.
The price of diesel, the lifeblood of US industry, has jumped 48 per cent to $5.57 since the war began, and is now 24 cents off its record high.
Tom Kloza, chief energy adviser for Gulf Oil, a big fuel retailer and distributor in the US, said industry was becoming nervous about surging pump prices and how this would impact fuel demand.
“I was at an industry meeting this week, and I can tell you one of the biggest concerns was that we might see diesel prices [in the US] go to $10, and the equipment, you know, the pumps and the dispensers and so forth can’t handle a number that high. That’s incredible,” he said.
He said the Trump administration would face pressure to ban exports of products the longer prices remain elevated.
“If people are paying $5 for gasoline on Memorial Day weekend, you’ll hear some lawmakers talk about, you know, some kinds of restrictions on exports,” he said.
Trump on Friday said the rise in fuel prices was temporary and heralded America’s booming export trade.
“When this war ends, the gasoline and oil and everything is going to come tumbling down,” he said. “We have more oil production right now than any time in history. And if you take a look at the ships, they’re all coming up to Texas, Louisiana, Alaska.”
