The national average hit $4.14 per gallon on April 7 — the first time above $4 since August 2022. Oil had spiked to $118 a barrel during the Iran war, up from $73 pre-war, before crashing 16% on the ceasefire announcement. The ceasefire isn't the only thing moving prices: two major California refineries are closing, OPEC+ just agreed to boost production, and tariffs are squeezing energy costs from the other direction.
1. Relief Is Coming — Give It Two Weeks (Patrick De Haan, GasBuddy; Pavel Molchanov, Raymond James)
The ceasefire just wiped $20 off oil prices overnight. Pump prices will follow — they always do, just slower.
De Haan expects prices to fall 1-3 cents a day starting this week. He projects the national average will drop below $4 within one to two weeks as the Iran war premium unwinds. His full-year forecast has the national average at $2.97 — the lowest since 2020 — with a December low around $2.83. The logic: the world has been quietly recovering from the pandemic and Russia-Ukraine shocks since 2022, and the fundamentals favor cheaper gas.
Raymond James analyst Pavel Molchanov puts a number on the relief. The ceasefire should shave about 45 cents off the national average, pulling it back to around $3.70. That's still not cheap, but it's a meaningful drop. The EIA's forecast is in the same neighborhood: prices peak this month at $4.30, then decline steadily through the year as global oversupply builds.
2. Don't Get Your Hopes Up (Caleb Jasso, Institute for Energy Research; EIA Refinery Analysis)
The ceasefire helps with the war premium. It doesn't help with the refineries that are closing or the tariffs that are making everything more expensive.
Two California refineries are shutting down within months of each other. Phillips 66 Wilmington (139,000 barrels a day) closed late last year, and Valero Benicia (145,000 barrels a day) is closing this month. That's 17% of California's refinery capacity gone in 12 months. The state has a captive market with no easy outside supply options — when capacity shrinks, prices stay high regardless of what crude oil does.
Caleb Jasso at the Institute for Energy Research isn't convinced the ceasefire delivers meaningful relief. He notes it depends entirely on whether the ceasefire holds, and a two-week window may not be long enough for refiners to lock in lower crude costs. Meanwhile, 2026 gasoline inventories are forecast to fall to their lowest levels since 2000 as the refinery closures bite. California could stay above $5 a gallon even if the rest of the country drops below $3.
3. The Tariff Squeeze (Wood Mackenzie, Evergreen Action)
Lower crude should mean lower gas. But steel tariffs are pushing up production costs, and Canadian crude tariffs could add 25-50 cents a gallon in the Midwest.
Tariffs are hitting energy from both sides. The 25% steel tariff makes drilling, refining, and transmission more expensive. Canadian crude imports face their own tariffs, which energy analysts say could add 25-50 cents per gallon in Midwest states that depend on Canadian oil. The net effect: even as crude falls on the ceasefire, production costs are rising.
The macroeconomic math cuts both ways. Lower global GDP from tariffs means lower oil demand — J.P. Morgan forecasts average Brent crude at $60 a barrel for 2026, which would normally mean sub-$3 gas. But that demand destruction comes with its own pain: tariffs represent the largest US tax increase as a percentage of GDP since 1993, costing the average household roughly $1,500. You might pay less at the pump eventually — but you're paying more everywhere else.
Where This Lands
If the ceasefire holds, most analysts agree prices will start falling this week and could drop below $4 within two weeks. The longer-term picture is messier — De Haan sees sub-$3 by December, but that assumes the ceasefire becomes permanent and refinery closures don't choke supply. On the other hand, California losing 17% of its refining capacity and tariffs adding cost at every link in the chain aren't going away, regardless of what happens in the Middle East. Where you end up depends a lot on where you live: most of the country could see $3 gas by fall, but the West Coast may be stuck above $5.