- US gasoline averaged $4+ a gallon at the end of March — a four-year high driven by the Iran war — but American consumers still pay far less than counterparts in Germany ($8.75/gallon), the UK, France, Norway, or most other developed countries.
- The gap is almost entirely explained by taxes: only about 60 cents per gallon of the US price goes to federal and state taxes, while in most of Europe, taxes make up 50%–60% of the retail price of fuel.
- The US produces more oil than any nation in the world — far more than during the 1970s oil crisis — insulating the domestic market from global supply shocks in ways that heavily import-dependent nations simply cannot replicate.
- While European nations have historically used fuel taxes to fund everything from public transit to general government spending, the US primarily channels gas taxes into road and highway maintenance, with carbon-related fuel charges still limited compared to Europe.
What Happened?
The Iran war and the closure of the Strait of Hormuz pushed US average gasoline prices above $4 a gallon for the first time in nearly four years by late March 2026 — a politically sensitive threshold for a president who campaigned on lowering consumer costs. The price shock has rekindled comparisons with the 1970s oil crisis and raised questions about America’s exposure to Middle East energy disruption. But in a global context, the US is actually experiencing one of the mildest versions of the shock: drivers in Germany paid $8.75 a gallon in March, and most other developed nations are seeing even steeper pain relative to the US baseline.
Why It Matters?
The gas price comparison matters for two reasons. First, it illustrates why the Iran war’s inflationary impact is falling disproportionately on European and Asian economies — nations that are far more dependent on Persian Gulf oil and carry higher structural fuel taxes — relative to the United States. Second, it reframes the US political debate: $4 gas feels catastrophic to American consumers, but it represents a uniquely protected position in a global energy shock. The US pumps more oil than any country on earth, runs a domestic shale industry that didn’t exist during the 1970s crisis, and has kept fuel taxes among the lowest in the developed world. The pain is real, but the structural insulation is also real.
What’s Next?
US gas prices will track Brent crude closely as long as Hormuz remains disrupted — and with oil now above $108 a barrel, further increases at the pump are likely if peace talks don’t progress. Energy Secretary Chris Wright has already warned prices may stay elevated at $3+ through next year even in a resolution scenario. For European consumers already paying $8–9 a gallon, a prolonged Hormuz closure could push prices even further, amplifying the political pressure on EU governments and adding to calls for the US to reach a deal with Iran to reopen the waterway.
Source: The Wall Street Journal
