The average retail price of gasoline in the United States has surpassed the $4 per gallon mark for the first time since August 2022. Since the US-Israel joint attack on Iran on February 28, the cumulative price increase has been close to $1/gallon.
The rise in oil prices is directly eroding the purchasing power of American households. A recent Reuters poll shows that 55% of Americans say their household finances have been affected by rising gasoline prices, with 21% reporting a &#34;significant&#34; impact. Concurrently, 87% of respondents anticipate further increases in gasoline prices over the next month.
Following events such as Iran's attack on a Kuwaiti oil tanker, WTI crude oil prices briefly surpassed $106, and Brent crude reached $109. High energy costs are not only dealing a direct blow to the financial health of American households but may also offset the tax cut dividends from the &#34;Big Beautiful Bill&#34; (OBBBA) passed last year.
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US-AAA National Average Gasoline Price
<h2>The $5 Red Line: Tax Cut Dividends May Be Swallowed</h2>
JP Morgan economist Michael S. Hanson estimates that if the current $4 oil price level is maintained throughout the year, American household purchasing power will suffer an additional loss of approximately $110 billion. Meanwhile, the OBBBA is estimated to provide slightly over $200 billion in tax cuts for individual households this year, leaving some buffer between the two.
But JP Morgan also drew a clear red line: once oil prices rise to $5/gallon and persist, additional household gasoline expenditures will reach approximately $233 billion, essentially canceling out all tax cut dividends. Due to persistent supply shortages, this price level is not a low-probability event before mid-April.
To make matters worse, the effectiveness of the tax cuts themselves is being discounted. As of March 25, tax refunds for this filing season were only about $32 billion more than the same period last year. At this pace, the total increase in refunds for the year would be around $55 billion, far below previous market expectations.
Structural issues also cannot be ignored. Tax cut benefits are highly concentrated among high-income groups, while gasoline expenditures are distributed relatively evenly across income levels—gasoline spending for families in the lowest income quintile accounts for more than 3% of total expenditures, over one percentage point higher than the highest quintile. This means the actual pain of oil price shocks for low- and middle-income families is far more concentrated than aggregate figures suggest.
Politically, Trump's support rating on cost-of-living issues has dropped to 29%, with 63% of Americans disapproving of his handling of prices. Trump himself acknowledged the economic cost of the conflict on Thursday, stating: &#34;I saw what was happening in Iran, and I said, 'I wasn't willing to launch this operation, but we had to do it.'&#34;
<h2>Structural Impact: Low- and Middle-Income Households Hit Harder</h2>
The distribution of oil price shocks and tax cut dividends differs significantly across income groups. Tax cut benefits are highly concentrated among high-income groups, while gasoline expenditures are relatively evenly distributed across income levels.
For families in the lowest income quintile, gasoline expenditures account for more than 3% of annual total expenditures, over a full percentage point higher than the highest quintile. Consequently, the pain of rising oil prices is more real and immediate for low- and middle-income families, while they receive relatively limited benefits from tax cuts. The actual drag of high oil prices on consumption will fall more heavily on those with weaker purchasing power.

Recent escalation in Middle East conflicts has heightened market concerns over geopolitical risks. At the same time, international oil prices are fluctuating with the situation, impacting the global energy market and overall risk sentiment. Sectors such as energy, shipping, and technology could all face direct impacts.How long do you think the Middle East situation will affect the Hong Kong and U.S. stock markets? Is it a short-term fluctuation or a long-term impact? Feel free to share your thoughts!

Recent escalation in Middle East conflicts has heightened market concerns over geopolitical risks. At the same time, international oil prices are fluctuating with the situation, impacting the global energy market and overall risk sentiment. Sectors such as energy, shipping, and technology could all face direct impacts.How long do you think the Middle East situation will affect the Hong Kong and U.S. stock markets? Is it a short-term fluctuation or a long-term impact? Feel free to share your thoughts!

Escalating tensions in the Middle East—will oil price volatility stir the stock market?

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US average gasoline prices have surpassed $4/gallon, with a cumulative increase of nearly $1 since the US-Israel joint attack on Iran on February 28. JP Morgan estimates that if oil prices rise to $5/gallon and persist, the approximately $200 billion tax cut dividend from the "Big Beautiful Bill" (OBBBA) will be entirely swallowed by gasoline bills. Additionally, polls show 55% of Americans say their household finances have been hit by rising oil prices, and 87% expect prices to rise further

- The average retail price of gasoline in the U.S. has surpassed $4 per gallon for the first time since August 2022, influenced by recent geopolitical tensions.  
- This surge in gas prices is significantly impacting household purchasing power, with 55% of Americans reporting financial effects and expectations of further price increases.  
- Analysts project that sustained prices above $5 per gallon will erode tax benefits from the Inflation Reduction Act, disproportionately affecting low- to middle-income families more than wealthier households.

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First Time Since August 2022! US Average Gasoline Price Breaks $4 Per Gallon