President Trump has accused major oil companies of price gouging consumers and says he has directed the Justice Department to investigate why gasoline prices have not fallen as quickly as crude oil prices.
The oil industry rejects the accusation, arguing that retail gasoline prices naturally lag declines in crude oil because of refining, transportation, inventories and other market factors.
Energy analysts say both sides have a point: pump prices typically fall more slowly than oil prices, though the pace of the decline has become a political issue as Americans continue to pay elevated prices for fuel.
President Trump has opened a new front in his administration's energy policy, accusing the nation's largest oil companies of "gouging" motorists by failing to pass along lower crude oil prices to consumers.
In a post on Truth Social, Trump said he had instructed the Department of Justice to investigate what he described as possible price gouging after oil prices fell sharply following easing tensions in the Middle East.
"The big oil companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil," Trump wrote. "Those prices are dropping like a rock! In other words, customers are being 'gouged.'" He added that gasoline prices "better start going down a lot faster than what I'm seeing."
According to AAA, the national average price of regular gas is $3.86 a gallon, down six cents from a week ago. This time last year, the average price was $3.19 a gallon.
The White House has argued that falling energy prices are central to Trump's economic agenda and says lower gasoline prices should quickly follow the recent decline in crude oil markets.
Industry pushes back
The oil industry responded swiftly, saying gasoline prices do not move in lockstep with crude oil.
The American Petroleum Institute (API), which represents major U.S. oil producers and refiners, said the industry shares the administration's goal of lowering costs for consumers but argued that several factors affect retail gasoline prices.
"Gasoline prices don't move in lockstep with crude oil, especially during a major global disruption that is still affecting supply, refining and inventories," API spokeswoman Bethany Williams said in a statement to the media. "Our focus remains on supporting market stability and delivering the energy consumers need."
Oil executives also note that gasoline sold at service stations was often refined from crude purchased weeks earlier at higher prices. Before stations can lower prices significantly, they generally must sell through existing inventory acquired at those earlier costs.
Why prices lag
Energy economists say the relationship between crude oil and gasoline prices is more complicated than a direct one-to-one comparison.
Crude oil accounts for roughly half the price of a gallon of gasoline. The remainder reflects refining costs, transportation, storage, distribution, marketing expenses and taxes. Because of that supply chain, it often takes several weeks before lower crude prices are fully reflected at the pump.
Analysts also point to the so-called "rockets and feathers" phenomenon, in which gasoline prices tend to rise quickly when crude oil becomes more expensive but decline more gradually after crude prices fall. Low gasoline inventories and uncertainty surrounding global energy supplies can further slow price declines.
For motorists, the key question is how quickly prices continue to fall. While national average gasoline prices have declined from their recent peak, analysts expect additional reductions could take several more weeks if crude oil prices remain lower and geopolitical tensions do not flare up again.