What Is Really Keeping Gas Prices High?

Contributors: Ari Page and Kayla Page  |  6 min read

Fuel costs are the operating expense every business owner is absorbing in August 2026, and the explanation making headlines about a war in the Middle East does not account for what is actually keeping prices this high.

Whether a business runs a delivery fleet, coordinates field service teams, or simply receives inventory from suppliers who do, August 2026 is the most expensive August for fuel on record. The national average has been above $4 per gallon every single day of the month. Diesel is up 46% year-over-year. And the explanation many people are pointing to, a war disrupting oil shipments through the Strait of Hormuz, tells only part of the story.

The fuller picture involves two overlapping problems: crude oil prices elevated by a global conflict, and refining costs elevated by a domestic capacity shortage that predates the war by years. Understanding the difference matters for business owners because only one of those problems will ease with a ceasefire. The other is structural and persistent.

Where America's Oil Comes From and Why Prices Are Still High

The United States produced a record 13.6 million barrels of crude oil per day in 2025, more than any country in history, and by mid-2026 had become the world's top petroleum exporter. The U.S. produces more crude oil than any country in history, yet its refinery system still depends on a combination of domestic and imported crude. The national average for a gallon of gas has been above $4 all month. That gap is the first thing business owners need to understand about 2026 fuel costs.

The US still imports crude oil, primarily from Canada, which supplied over 60% of US crude imports in 2025, according to EIA data. The entire Middle East Gulf region, including Saudi Arabia, Iraq, Kuwait, and the UAE combined, supplied just 8% of US crude imports in 2025, according to a separate EIA report. Approximately 80% of Persian Gulf oil exports flow east to Asia, not to the United States. Although the U.S. receives relatively little crude from the Persian Gulf, American oil prices are still tied to global markets. That becomes important when looking at how the Strait of Hormuz affected prices in 2026.

How Crude Becomes Fuel, and Where the Real Cost Problem Sits

Crude oil cannot go directly from the ground into a vehicle or a freight truck. It passes through a refinery first, where a process called fractional distillation separates it into gasoline, diesel, jet fuel, and other products by boiling point. After refining, those products move by pipeline to distribution terminals, then by tanker truck to retail stations. State and federal taxes apply at the point of sale. The result is four distinct cost components in every gallon a driver or business buys.

According to EIA data, crude oil represents approximately 57% of the retail price. Refining costs and profits account for 21%, taxes 14%, and distribution 8%. All four move independently. Crude is the dominant variable, but the refining component is what breaks the connection business owners expect between news headlines about oil prices and their actual fuel receipts. When refining costs are elevated on their own, the pump price stays high even when crude falls.

In 1982, the US operated 254 refineries. EIA data puts the count at 130 operable refineries as of January 2026, nearly half gone over four decades as smaller facilities closed and no large-scale replacements were built. No new large refinery with significant downstream processing capacity has come online in the U.S. since 1977. California, which accounts for a disproportionate share of national fuel demand, has fallen from 23 refineries in 2000 to a projected 11 by year end, according to the American Petroleum Institute. Although today’s refineries are much larger than those operating decades ago, the system is currently running with very little spare room. U.S. refinery utilization reached 97.2% in mid-August and 97.4% the following week.

The Hidden Refining Cost Business Owners Should Be Tracking

The refining industry tracks its own market price through something called the 3-2-1 crack spread: three barrels of crude go in, and two barrels of gasoline plus one barrel of diesel come out. The spread measures the difference between the wholesale value of those finished products and the cost of the crude used to make them. The 3-2-1 crack spread is a widely used indicator of refining margins and how tight the refined-fuel market has become.

Source: eco3min / EIA historical dataset; Fuel Data Portal

The 40-year historical average of the crack spread is $8 to $12 per barrel. In July 2026 it peaked at $72, and it sat around $64 as of early August, placing it in the 99th percentile of the full historical range. The 131 US refineries still operating were running at 97.2% of operable capacity as of August 14, according to EIA's weekly report, leaving the system with almost no buffer. When a business's fuel cost projections are built around crude oil news and crude dips but the pump price holds, the crack spread is the reason.

Phillips 66's Q2 2026 SEC filing shows what a constrained refining market does to margins: its worldwide realized refining margin more than doubled year-over-year, from $11.25 per barrel to $24.08, while refining pre-tax income rose from $359 million in Q2 2025 to $3.06 billion in Q2 2026. Those earnings came from the same refineries at essentially the same utilization rate. The results show how stronger refined-product margins can translate into substantially higher refinery earnings.

The 21% refining share shown above is at the elevated end of its historical range, which normally runs 14 to 20%. And it is likely to grow. EIA's 2026 outlook projects crude's share of the pump price to fall in 2026 while crack spreads rise further to exceed the prior two years because of lower refinery production and tight market conditions. When crude's share falls and refining stays elevated, the refining component accounts for a larger slice of what drivers and businesses pay. Lower crude prices can help, but refinery capacity remains the bottleneck. With U.S. refineries already near capacity and no major new ones being built, relief at the pump may remain limited.

How Much of the Price Increase Actually Comes From the Strait of Hormuz?

Gas was $2.98 nationally on February 26, 2026. The conflict with Iran began two days later. By late May the national average had peaked at $4.55, and EIA called the Q1 2026 crude price increase the largest on an inflation-adjusted basis since records began in 1988. Businesses that built their 2026 cost plans on a $2.98 baseline absorbed a 53% increase in the pump price within roughly three months.

To understand why the Strait affected US prices at all, it helps to understand how American crude is actually priced. US oil is traded as West Texas Intermediate, or WTI, a benchmark price set on global commodity markets alongside Brent crude from the North Sea and other international grades. WTI does not price independently based on what is happening in Texas or North Dakota. It moves with global supply and demand conditions because oil markets are internationally integrated. When a major supply disruption occurs anywhere in the world, all major crude benchmarks, including WTI, rise in response, regardless of whether US physical supply is directly affected.

The Strait affected U.S. pump prices through that global pricing system rather than by directly cutting off American crude supply. The disruption tightened global supply, pushed benchmarks such as WTI higher, and increased the crude costs paid by U.S. refiners.

One of the clearest data points for business cost planning came on August 6, when AAA reported that crude oil had fallen into the $70-per-barrel range amid optimism that Strait operations could resume. Yet the national average for gasoline declined by only about three cents. That relatively small movement suggests that lower crude prices alone were not enough to meaningfully reduce the pump cost, with elevated refining margins continuing to add pressure independently of crude. For businesses hoping a ceasefire or reopening of the Strait will quickly bring fuel costs back down, the data points to a more gradual path to relief.

No large-scale greenfield refinery has been built in the United States since 1977. Building one requires billions in capital, a decade or more of permitting and construction, and confidence that petroleum demand and the regulatory environment will justify the investment for decades. Environmental compliance costs, long-term EV demand uncertainty, and regulatory risk have deterred that investment. The result is a domestic refinery system that cannot absorb external shocks without immediate price consequences for businesses at every point in the supply chain. OPIS analysts have stated that even a full Strait reopening would not return prices to pre-war levels because the refinery constraint existed before the conflict and will outlast it. The war raised crude through global market integration. Tight U.S. refining capacity, combined with a broader global shortage of refined products, can keep pump prices elevated even when crude prices pull back.

What the Venezuela Oil Deal Means for Business Owners Planning Ahead

On August 29, 2026, President Trump announced a 25-year bilateral agreement with Venezuela targeting 17 strategic oilfields and an initial production goal of 1.5 million barrels per day. Trump stated it would "substantially lower gas prices" for American taxpayers. The energy research community was consistent in its assessment of the timeline. Venezuela currently produces approximately 1.25 million barrels per day, down from 3 million in the late 1990s after decades of mismanagement. Many of the targeted fields are undeveloped greenfield acreage. Time and Forbes both reported those fields will take a minimum of 7 to 10 years to bring to production from initial investment. Venezuela's crude is also among the heaviest in the world, requiring blending with lighter hydrocarbons before it can move through pipelines and reach export terminals.

GasBuddy analyst Patrick De Haan noted that fuel price changes from new crude supply "won't happen overnight or even in months," and added that "global refining capacity is currently constrained, further limiting the speed at which additional crude supply could affect the market." Even if Venezuelan crude were available tomorrow, it would move through US refineries already running at 97.2% capacity. The Venezuela agreement is meaningful at a long-term geopolitical scale. As a variable in 2026 operating cost planning, it does not yet exist. Venezuela illustrates a broader point relevant here: the world holds roughly 1,567 billion barrels of proven oil reserves, about 47 years of supply at current consumption rates, according to the OPEC Annual Statistical Bulletin. The scarcity that drives pump prices in 2026 is not geological. It is the industrial infrastructure that turns available crude into usable fuel, and that infrastructure is the constraint businesses are actually paying for.

How Elevated Fuel Costs Are Hitting Business Operations

Diesel averaged $5.40 per gallon in the second week of August 2026, up from $3.70 at the same point in 2025. For businesses running delivery vehicles, contractor fleets, or field service teams, that 46% increase applies to every gallon consumed. The DOE projects diesel will remain above $4.70 at year end. And because the refinery margin is the structural floor holding prices up, an eventual drop in crude will not deliver proportional diesel relief. Operators who project fuel costs forward based on crude oil headlines rather than actual pump trends will continue to underestimate what they spend.

The exposure runs further than direct fuel costs. Carriers, distributors, and suppliers pass elevated diesel costs downstream through freight surcharges, materials pricing, and rate adjustments. A business with no vehicles still absorbs those increases through vendor invoices that never reference fuel by name. Average gas prices rose by double digits year-over-year in every US state between August 2025 and August 2026. For businesses whose cost planning was calibrated to 2025 baselines, the gap is real, ongoing, and spread across multiple line items that are hard to isolate and harder to negotiate away.

What Business Owners Can Do Now

The refinery bottleneck does not stop at the gas station. With diesel prices sharply higher than a year ago, businesses are absorbing the impact through freight, delivery fees, supplier pricing, and materials costs, even when they do not operate vehicles themselves. That makes the way businesses manage everyday expenses more relevant. Business credit cards can help turn routine spending into something more strategic, with some offering rewards on fuel, shipping, travel, and other operating categories. Others offer introductory 0% APR periods that may provide added cash-flow flexibility when costs rise. Because offers and promotional periods vary by card, it helps to understand the terms and plan ahead for repayment.

The same strategy applies beyond transportation. Inventory, equipment, marketing, materials, and other recurring costs all compete for the same working capital. When operating expenses stay elevated, having access to business credit can give owners more flexibility in how and when those costs are paid while also helping separate business spending from personal credit and potentially earn rewards on purchases they already make. Fund&Grow helps entrepreneurs evaluate their credit profile and build a business funding strategy around their actual spending needs, whether the pressure is coming from fuel, shipping, inventory, or the broader cost of running the business.

Check Your Funding Potential

The Bottom Line

Gas prices are at their highest August levels on record, and businesses are absorbing the impact across fuel receipts, freight invoices, and supplier pricing. The Iran conflict raised crude prices through global market integration, not because America depends on Persian Gulf oil, which was just 8% of US crude imports in 2025. The deeper problem is a domestic refinery system down from 254 facilities in 1982 to 131 today, running at 97.2% capacity with no new large-scale construction since 1977. When crude pulled back in early August, pump prices barely moved because the refinery margin held independently. EIA projects crude's share of the pump price to fall in 2026 while crack spreads rise further, meaning the refining component grows as a share of what businesses pay. The Venezuela oil deal is a long-term development measured in years, not a 2026 planning variable. For business owners, the operating environment for the rest of this year is set. The question is how to manage costs within it.

About the Author

Ari Page is the Founder and CEO of Fund&Grow, a business credit consulting company he started in 2007. Over nearly two decades, he has helped more than 35,000 entrepreneurs and real estate investors access over $2.1 billion in total business funding. His expertise in business credit cards has made him a trusted resource for independent real estate investors looking to fund acquisitions, cover renovation costs, and grow their portfolios without drawing down personal reserves or taking on fixed debt service at the moments their business needs flexibility most. He is also the author of Fund&Grow: Easy & Affordable Ways to Get Money for Your Business

Copyright © 2026 Fund&Grow. All rights reserved. This article contains Fund&Grow commentary based on cited public and third-party sources. Underlying data remains attributable to the original sources cited.