Trump's Tariffs Could Increase Gas Prices Soon
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Americans have enjoyed some of the lowest gas prices in years this winter, but can that last with tariffs on energy imports now in effect?
The national average for gasoline has stayed below $3.20 for months, a level that has felt more normal — and bearable — compared to what drivers have gotten used to paying since global fuel prices soared in 2022. However, several forces could drive prices up in the coming weeks: rising demand, President Donald Trump's tariffs on energy imports and a seasonal shift in fuel blends.
It's not a foregone conclusion. The cost of crude oil dipped below $66 per barrel for the first time since September on Wednesday, according to the West Texas Intermediate Exchange. Lower oil prices could spare drivers from steep price increases, as crude oil accounts for about half of what you pay for a gallon of gas.
On Thursday, the average price for a regular gallon of gas was $3.11, which is about 26 cents less than a year ago, according to AAA.
Trump's tariffs on Canada, put in place Tuesday, could have an impact on gas prices in the next two weeks for a swath of the Northeast. Price increases are expected to follow in several other regions, according to the price comparison app GasBuddy.
While the tariff rate on Canadian energy (10%) is lower than the general tariff rate for Canada (25%), the U.S. imports a significant amount of Canadian oil — millions of barrels of every day.
The 10% tariff is enough to imminently lead to a 20-cent or more increase in gas and diesel prices in Maine, Connecticut, Vermont, Massachusetts, Rhode Island, New Hampshire — areas that depend on fuel from a large refinery in Saint John, Canada, according to GasBuddy.
"U.S. refineries can’t simply switch from processing Canadian to American crude oil," Patrick De Haan, GasBuddy's head of petroleum analysis, wrote in a report. "The real-world impact of tariffs won’t be to shift refining patterns; instead, it will be to add costs throughout the system."
Tariffs are just one of the reasons why costs are projected to go up.
Seasons change and drivers hit the road
Gas prices typically rise in the spring when refineries switch from winter fuel blends to a summer grade. The deadline from the government for refineries to make the transition is May 1, but refineries typically start changing their blends in March.
Due to the mix of the components in summer fuel, the cost of gasoline can rise by 15 cents per gallon.
In addition, as warmer weather arrives and driving conditions improve, motorists get out on the highways in droves and gasoline demand typically increases.
Spring break travel can also provide a bump in road travel. Spring break is basically a preview of summer, which is the busiest driving season in the U.S.
When more drivers are on the roads, gasoline demand rises — and so do pump prices. The U.S. Energy Information Administration forecasts gas prices will be highest in the third quarter of the year (July to September) at around $3.35 per gallon.
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