Donald Trump announced on Wednesday that he has directed the US Department of Justice to investigate oil companies for alleged price gouging, accusing them of failing to lower gasoline prices sufficiently despite declining oil costs amid the Middle East conflict.
In a social media post late Tuesday, Trump wrote: "The big oil companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for oil. Those prices are dropping like a rock! In other words, customers are being 'gouged.' I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I'm seeing!"
No further details on the investigation have been released since the post.
Oil Prices and Ceasefire Impact
Oil prices have softened in recent weeks as the US and Iran engage in peace talks. The two countries reached a 60-day ceasefire agreement last week, leading to the reopening of the Strait of Hormuz, through which a fifth of the world's oil and gas shipments pass. However, traffic through the strait remains significantly lower compared to pre-conflict levels.
Global gas prices have fallen accordingly. Brent crude, the global benchmark, has dropped below $75 for the first time since the war began. US gas prices at the pump have decreased from a peak of $4.56 per gallon in May to a current average of $3.92. While this offers some relief, average gas prices a year ago were $0.70 cheaper at $3.22 per gallon.
Political and Economic Context
Record-high gas prices have frustrated many Americans, particularly those who voted for Trump with expectations that he would curb inflation. Price increases reached a generational high of 9.1% in 2022 under President Joe Biden.
During a rally in Pennsylvania on Tuesday, Trump sought to reassure voters: "That oil is going to come charging down, and with oil comes everything else."
Experts remain skeptical that gas prices can fully return to prewar levels for the rest of the year due to halts in oil production and refining facilities that have reduced capacity during the Iran conflict.
US inflation in May hit a three-year peak of 4.2%, largely driven by elevated gas prices. Core inflation, excluding food and energy, stood at 2.9%, still slightly elevated compared to previous months.
Although Trump has urged the US Federal Reserve to lower interest rates, central bank officials have released projections indicating one interest rate hike this year amid higher inflation.
