Plummeting US Fuel Prices Could Trigger a Host of New Problems

The decline in fuel prices in the United States has begun to provide relief to drivers after months of supply disruptions. However, experts warn that this sharp decrease could potentially bring a series of new problems for national economic stability.

According to the latest estimates from AAA as of Monday (30/06/2026), the national average petrol price has fallen to US$3.86, or approximately Rp69,000 per gallon. Although this figure remains much higher than the period before the outbreak of conflict with Iran on 28 February, it represents a significant decrease from the four-year high of US$4.56 reached in May due to the blockade of the Strait of Hormund by Tehran.

Although tensions flared again last weekend with retaliatory attacks between the US and Iran, the flow of oil through the Strait of Hormuz remains operational. This continues to exert downward pressure on global prices. Brent crude oil is now in the range of US$73 per barrel, returning to pre-war levels after briefly touching figures above US$120 in late April.

The Donald Trump administration continues to seek further progress in this sector, given that surveys show significant public dissatisfaction with household budget pressures and the handling of inflation. The US Department of Justice has even launched an investigation into alleged price gouging practices by major oil companies.

However, the American Petroleum Institute (API) denies these allegations. “Petrol prices do not move in tandem with crude oil, especially during major global disruptions that still affect supply, refining, and inventories,” said API spokesperson Bethany Williams.

Behind the good news for consumers, economists see hidden risks. Torsten Sløk, Chief Economist at Apollo Global Management, stated that cheaper petrol could trigger pent-up demand, which could instead hinder progress in curbing inflation.

“The market narrative has shifted from ‘low oil prices mean low inflation’ to ‘low oil prices mean more demand in an already hot economy and mean higher inflation’,” Sløk wrote in his notes. He predicted this condition could force the Federal Reserve to raise interest rates again immediately.

Furthermore, Abhi Gupta from Yale University’s Budget Lab highlighted the dual impact of the US as both an oil producer and consumer. A drop in prices may help consumers, but it could hinder investment by fracking companies, particularly in oil-producing states such as Texas, New Mexico, and Oklahoma.

Another issue arising is the potential hindrance of the transition to electric vehicles (EV). When fuel prices surged, interest in EVs increased rapidly, reaching 26.1% of total car sales last May, according to a Goldman Sachs report.

James Stock, a professor of political economy at Harvard University, warned that a rapid drop in fuel prices could lose that momentum. Consumers may return to choosing internal combustion engine (ICE) vehicles, which in turn puts US automakers at risk of falling behind in the future global EV market competition.