Trump orders DOJ to investigate oil companies over 'gouging' on gas prices

The accusation

President Donald Trump said early Wednesday that he had ordered the Department of Justice to immediately investigate large oil companies for price gouging. In a Truth Social post, he wrote that pump prices were not falling fast enough to match the decline in crude oil costs. "The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil," Trump wrote. "Those prices are dropping like a rock! In other words, customers are being 'gouged.'"

He later named Exxon Mobil, Chevron, Shell and BP as among the firms under scrutiny. No further details on the probe have been released.

The price gap

US gasoline prices have fallen an average of 49 cents a gallon over the past month, according to AAA, but remain elevated. The national average stood at $3.93 per gallon on Wednesday, down from a May peak of $4.56 but still 70 cents above the $3.22 recorded a year earlier. Crude oil, the main ingredient, has dropped more sharply: West Texas Intermediate fell 27% in the last month to $70.45 a barrel, while Brent crude slipped below $75 for the first time since the Iran conflict began.

The Iran factor

Oil prices spiked after Iran responded to US-Israeli attacks on 28 February by effectively closing the Strait of Hormuz, a chokepoint for one-fifth of global oil and gas shipments. Brent briefly neared $119 a barrel in March. Last week, Washington and Tehran reached a 60-day ceasefire, allowing tanker traffic to resume through the strait, though volumes remain far below pre-conflict levels. The easing of supply fears has driven crude lower, but the pass-through to gasoline has been slower.

Expert scepticism

Energy analysts pushed back on the gouging allegation. Karen Young, a senior research scholar at Columbia University's Center on Global Energy Policy, called the claim "a bit like political theater" in a CNBC interview. She noted that oil companies do not set retail prices; gas station owners do, and they often have little choice but to keep prices high when crude costs surged. Refining and distribution lags mean it can take weeks for market changes to reach consumers.

That's not really how gasoline prices work in the U.S.

Political pressure

Trump is facing midterm elections and an inflation rate that hit a three-year high of 4.2% in May, driven largely by fuel costs. Core inflation, excluding food and energy, was 2.9%. At a Pennsylvania rally on Tuesday, he told supporters that "oil is going to come charging down, and with oil comes everything else." The American Petroleum Institute said the industry shares the goal of relief but stressed that the conflict "still affects supply, refining and inventories."

Our industry shares the goal of providing relief at the pump and restoring stability to global energy markets.