New Congress faces long road to lower fuel costs after midterm wins

Democratic candidates secured decisive victories in the midterm elections, a result driven largely by voter frustration over rising fuel costs linked to the war in Iran. The conflict has disrupted global oil supply, pushing prices for gasoline and diesel to historic highs. While the new congressional majority gains power in January, energy experts caution that immediate price relief is unlikely.

Before the war began, approximately 20% of global oil passed through the Strait of Hormuz. The blockade of that waterway caused Brent crude prices to spike from roughly $70 per barrel in late February to near $110. Prices have since settled around $95. According to AAA, the average cost of a gallon of gasoline is now $4.12, an increase of about $1 compared to a year ago. Diesel prices reached a record high of $6.52 per gallon in September and remain approximately $2.50 above last year’s levels.

Federal intervention so far has had limited impact on pump prices. President Trump attempted to lower diesel costs by relaxing rules on dyed diesel and temporarily lifting sanctions on Russian diesel exports. Neither measure produced a substantial price drop. The incoming Democratic Congress holds limited direct authority over global oil markets, but it can influence the executive branch. Senate Minority Leader Chuck Schumer told reporters on Wednesday that Democrats intend to end the war, stating that "relief is on the way."

Claudio Galimberti, chief economist at Rystad Energy, noted in a market note that a unified Democratic Congress could make military escalation more difficult by attaching conditions to war spending. However, Jorge León, head of geopolitical analysis at Rystad Energy, emphasized that President Trump retains full discretionary authority over military strikes, blockades, and sanctions. The president has sent conflicting signals about the conflict, warning Gulf Arab nations of a new military campaign while acknowledging voter dissatisfaction with gas prices.

If a ceasefire is announced, crude oil prices could drop immediately. Jaime Brito, executive director of refining and oil markets for Dow Jones Energy, estimated that crude prices could fall by $15 or $20 per barrel within two to three days of a formal announcement. However, lower crude prices do not instantly translate to lower pump prices. Ships must return to their original routes through the strait, and refineries must process the increased volume of oil.

Brito estimates it could take three months for gasoline and diesel prices to reach prewar levels following a deal. León predicts a longer timeline, suggesting it may take six months for crude to stabilize and an additional month or two for refined fuels. Both experts warned that hiccups in the process could extend the recovery period to a full year. Rising freight and insurance costs for shipping oil around the strait also contribute to elevated prices.

Additional variables could complicate the price recovery. Continued attacks on Russian refineries by Ukraine may keep diesel prices high longer than gasoline prices, as Russia supplies a large portion of the global diesel market. U.S. refineries are currently operating above 90% capacity, creating a risk that emergency maintenance could delay the processing of newly available crude. Brito concluded that a definitive end to the conflict is necessary for prices to normalize.