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Gas Prices Are up 40% This Year and Most Drivers Haven’t Fully Calculated What That Means for Their Budget

High gas prices are taking a toll on many Americans' wallets.

By Paige Cerulli , Edited by Andrea Basse

Updated Oct. 7, 2026

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If you're struggling to protect your home budget, it might be because high gas prices are draining your wallet every time you fill up. As of October 5, a gallon of regular gas averaged $4.37, which is 39.3% higher than its $3.13 average one year ago. The pain at the pump is extra frustrating and impactful because it also comes as food and housing costs are elevated; if you're having a hard time keeping up with gas costs, you're not the only one.

Here's why gas prices keep going up, what this might mean for your budget, and when we might see prices start to fall.

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The impact of supply and demand on gas prices

The conflict with Iran significantly disrupted the crude oil supply available throughout the world. In January 2026, crude oil averaged $60 per barrel, but it had climbed to $102 per barrel by May 2026, an increase of about 70%.

The U.S. Energy Information Administration (EIA) attributed the price fluctuation to increased supply disruption. According to the EIA, crude oil and petroleum moving through the Strait of Hormuz decreased to 4.9 million barrels per day in the second quarter of 2026. That's a decrease from an average of 21.6 million barrels per day in the fourth quarter of 2025.

With less supply, prices tend to increase, and since crude oil is about half of the price you pay at the pump, a major increase in crude oil costs indicates that gasoline prices also climb.

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Refining margins

Refining margins also affect the price you pay at the pump. Crude oil is delivered to refineries, and that fuel has to be refined into a product like gasoline or diesel before you can use it. The refining margin, or the difference between the cost of turning crude oil into fuel and the price that the fuel sells for, impacts sale costs.

If demand for fuel is strong compared to the available supply, the margins often widen, driving up prices at the pump. Margins and prices fluctuate as supply and demand change.

How oil futures trading affects wholesale prices

Oil prices may also be affected by financial market activity, including oil futures trading. Investors may enter into contracts for oil delivery; these future deliveries have a set date and price. Oil futures let the buyer protect themselves against potential market volatility, such as if an airline buys oil futures to lock in a price and protect itself from potentially higher oil costs.

Oil futures activity may signal expectations about future prices, and those expectations may impact market decisions. If oil futures prices quickly rise, oil producers might believe that demand is surging and they might increase their oil production. As a result, current demand and supply may change, and prices may fluctuate.

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The rockets and feathers pattern of gas prices

Economists use the phrase "rockets and feathers" to describe how gas prices increase faster than they fall. If crude oil prices increase, gas stations immediately raise their prices, since they need to generate the extra revenue required to pay for their next delivery at a higher price.

If crude oil prices fall, the market doesn't respond as quickly. The gas in the gas stations' storage tanks was purchased at a higher price, and if gas stations keep those prices higher, they have higher margins. Though gas stations quickly hike prices, they take much longer to lower the prices, and competition is usually what drives prices at the pump down.

How OPEC+ production decisions shape the outlook

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, works to regulate oil supply to the global market. Since OPEC+ countries hold the majority of the world's proven oil reserves, OPEC+'s decisions may affect global oil prices. The members meet and decide how much oil to sell on global markets; if they increase supply because of higher demand, prices tend to decrease.

The group's decisions and actions in light of the current shortage may affect prices and alter the market.

Bottom line

Keeping up with the higher gas prices may become even more challenging as you balance those prices with other expenses, like heating costs in winter. Consider using price comparison apps to help you find the lowest gas prices around. Enrolling in gas station loyalty programs or using a credit card that offers cash back on gas purchases may also help you to save. Some warehouse clubs also offer discounted gas prices if you have a membership.

You may also want to strategically time your fill-ups around your local gas station's weekly price cycles; you'll often find the lowest prices on Mondays and Tuesdays before the station adjusts its prices for the week. Each of these tips may help you keep more of your money while keeping your car filled up, too.

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