Fuel Prices May Stay High Despite Midterm Shift

The cost of driving in the United States remains elevated following the war in Iran, and experts say the recent shift in congressional power will not immediately lower prices at the pump.

Democrats are poised to take control of Congress by wide margins, a result driven largely by voter dissatisfaction with fuel costs. The conflict disrupted the Strait of Hormuz, a waterway through which about one fifth of the world's oil passed before the war. This disruption caused Brent crude to spike from about $70 in late February to roughly $110, before settling near $95 recently.

These oil prices have translated directly into higher costs for consumers. The average price of a gallon of gasoline is now $4.12, about one dollar more than a year ago. Diesel prices hit a record high of $6.52 per gallon in September. Although that figure has decreased slightly, diesel remains approximately $2.50 higher than it was a year prior, according to data from AAA.

The timeline for legislative action begins in January, when the new Congress is sworn in. Until then, the current administration retains full authority over military strikes, sanctions, and executive orders. During the election campaign, President Trump attempted to lower diesel costs by loosening federal rules on dyed diesel and temporarily lifting sanctions to allow more Russian diesel to reach global markets. Neither measure significantly reduced prices.

Senate Minority Leader Chuck Schumer stated on Wednesday that the new Democratic majority is focused on ending the war and reducing the cost of living. He told reporters that "relief is on the way." Claudio Galimberti, chief economist at Rystad Energy, noted that a unified Democratic Congress could make military escalation more expensive by attaching conditions to war spending and holding back confirmations of key officials.

However, the physical movement of oil requires time. Jorge León, head of geopolitical analysis at Rystad Energy, explained that ships currently taking longer routes to avoid the Strait of Hormuz must return to their origins and resume their standard paths. This process could create traffic congestion in the waterway. Furthermore, the crude oil must still be refined and distributed before it reaches local stations.

Jaime Brito, executive director of refining and oil markets for Dow Jones Energy, predicts that crude prices could drop by $15 or $20 a barrel within days of a confirmed peace deal. He estimates it could take three months for gasoline and diesel prices to return to prewar levels in the most optimistic scenario. León believes the timeline is longer, suggesting it may take six months for crude to stabilize, followed by another month or two for retail fuel prices to adjust.

Several variables could extend this recovery period. The war in Ukraine continues to impact global diesel supplies, as Russian refineries typically provide a large portion of the world's diesel. Additionally, U.S. refineries are currently operating above 90 percent capacity, leaving little room for emergency maintenance. If hostilities restart or if the current administration uses the period before the new Congress convenes to conduct further military operations, the timeline for lower prices could stretch to a year.

Freight and insurance costs for shipping oil have also risen due to the longer routes and increased risk. These elevated transport costs may keep Brent crude prices higher for a longer duration. Brito noted that expensive gasoline could become a new normal unless there is a definitive end to the conflict. He added that traders will look for formal announcements from both the U.S. and Iran confirming the reopening of the strait and a withdrawal of military presence.