Gas Should Be Cheaper–But It Isn’t
Brent crude peaked at $105 a barrel on July 23, 2026 and traded under $89 on August 13 — a 15.7% decline with the Strait of Hormuz still closed. Over the same stretch the U.S. national average for regular gasoline went from $4.096 on July 27 to $4.006 on August 10, a decline of 2.2%. Crude gave back $16.47 a barrel; the pump gave back nine cents a gallon. Economists call the pattern rockets and feathers, and it is measurable here: 37% of the move reached consumers on the way up, 23% on the way down. The 3-2-1 crack spread — the margin a refinery earns turning three barrels of crude into two of gasoline and one of diesel — closed at $64.16 a barrel on August 12 against a long-run norm of $20 to $25, an all-time record set after Russia suspended diesel exports on July 8.
Some of the gap is structural rather than behavioral: roughly seven million barrels a day of refining capacity is offline across Asia and the Middle East, and product inventories are thin. That is a supply constraint, and it is real. The more revealing fact is where the political pressure landed. On June 24 the President posted that customers were being “gouged” and said he had instructed the Justice Department to look into it immediately; five weeks later gasoline was eighteen cents higher than the day he posted. On July 3 the Justice Department and the Federal Trade Commission responded with a joint letter — addressed to state attorneys general, urging them to use state antitrust and price-gouging statutes. No federal investigation was opened. Congressional letters this year went to Exxon, Chevron, ConocoPhillips and other producers; none went to Marathon Petroleum, Valero or Phillips 66, the pure-play refiners now reporting the record margins. Marathon posted its strongest refining and marketing margin on an absolute basis at $24.84 a barrel; Phillips 66 realized $24.08 and raised its buyback authorization by $10 billion. On neither earnings call did an analyst ask about Washington. The question worth watching is not whether anyone is angry. It is why the anger and the margins are pointed at different companies.
Eric Garland is an intelligence analyst with 30 years in strategic intelligence practice, personally sanctioned by the Russian Federation in May 2022 for his work on Russian intelligence operations. He is the author of the 2016 “Game Theory” thread, named by The New York Times as one of the 25 most important tweets in history.
🔔 Subscribe for daily geopolitical intelligence analysis. Follow on X @ericgarland. Full long-form analysis on Substack. 🎤 Book Eric to speak: · Executive Speakers Bureau — https://www.executivespeakers.com/speaker/eric-garland · Leading Authorities — https://www.leadingauthorities.com/speakers/eric-garland · SPEAKING.com — https://speaking.com/speakers/eric-garland/
SOURCES
U.S. Energy Information Administration — Weekly Retail Gasoline and Diesel Prices, week ending August 10, 2026
U.S. Energy Information Administration — Weekly Petroleum Status Report, week ending August 7, 2026 (commercial crude +17.4 million barrels, refinery utilization 96.2%)
U.S. Energy Information Administration — Short-Term Energy Outlook, August 2026
U.S. Department of Justice, Antitrust Division and Federal Trade Commission — joint letter to State Attorneys General, July 3, 2026
Statement of the President — Truth Social, June 24, 2026; Oval Office remarks, August 3, 2026
RBN Energy — 3-2-1 crack spread daily quotation, August 12, 2026
International Energy Agency — Oil Market Report, August 2026
Marathon Petroleum and Phillips 66 — Q2 2026 earnings calls and transcripts, August 2026
Sen. Edward Markey — letter to the Federal Trade Commission, May 13, 2026
Sens. Whitehouse and Warren — letters to oil producers, June 15, 2026
