Gas prices fell below $4 for the first time in nearly four months, a day after President Donald Trump signed a peace deal with Iran.
The average price of a gallon of gas in the U.S. dropped to $3.999 Thursday from $4.025 Wednesday, according to AAA, bringing welcome relief to drivers who have struggled with inflation and high gas prices since Trump attacked Iran February 28.
Even so, gas prices may not dip below the pre-war $3 mark until 2027 because inventory levels remain low, said Linda Giesecke, director of refined products at energy consultancy Rapidan Energy Group.
“We therefore expect gasoline prices to remain elevated through the summer,” Giesecke told The Independent in an email. “A material weakening in gasoline prices is more likely in the winter, with an easing in crude prices and switch to winter-grade gasoline. Even then, $3 [per gallon of] gas seems unlikely any time soon.”
The U.S.-Iran peace deal is expected to open the Strait of Hormuz, a crucial passage for large amounts of the world’s oil and natural gas, whose closure created a historic energy crisis.
The opening can’t come soon enough for consumers - slowed shipping in the Strait sent barrels of oil past $100 in March for the first time in four years.
U.S. gas prices followed suit, ripping past $4 in late March for the first time since 2022 and eventually hitting more than $4 a gallon in every state just before Memorial Day Weekend.
Economists estimated that consumers paid at least an extra $59 billion at the pump over the past three months compared to the same period in 2025.
Gas prices’ impact on American wallets reverberated through the entire economy. From February 26 to May 28, the cost of a gallon of gas rose from $2.98 to $4.42, according to AAA, pushing the inflation rate from 2.4 percent in February to a three-year high of 4.2 percent in May.
As consumers struggled through rising cost of living, Trump’s administration offered little consolation. The president said at various times that an Iranian peace deal was more important than Americans’ financial struggles.
In May, Trump’s National Economic Council Director Kevin Hassett boasted that credit card spending was “through the roof” during an interview about the job market on Fox News. This trend is typically a bad sign in an economy where 73 percent of credit card debt is from everyday expenses, a January study found.
This past week, Trump said “I love the inflation” in response to a reporter’s question about a report showing inflation rose to 4.2 percent.
The future of gas prices should be brighter, but it remains to be seen how quickly prices will fall. It will take a few weeks for shipping to return to its normal volume, Giesecke said.
The stability of the peace deal will play an important role in gas prices. The agreement calls for a permanent end to hostilities, restarting talks between the U.S. and Iran over Tehran’s nuclear program, and starts a 60-day negotiating clock to reach a final deal on the future of Iran’s nuclear program, though Trump left the door open to resume attacks.
With additional reporting from The Associated Press
