JPMorgan warns $5 gas looks far more likely as Iran war pushes fuel prices sky high

JPMorgan analysts delivered a blunt warning Friday: the odds of seeing $5 gasoline this summer have become real. Brent crude has averaged $100 a barrel since fighting erupted in Iran in late February, but the real pressure comes from what refiners are choosing to make with that oil.

Jet fuel output is being ramped up to meet airline demand after the Strait of Hormuz blockade and damaged Middle Eastern facilities. That shift, the bank’s team led by Natasha Kaneva noted, necessarily squeezes diesel and then gasoline. The result is already visible at the pump: the national average hit $4.55 a gallon, a 52 percent jump from pre-war levels and $1.57 higher than before the conflict.

“This likely helps explain why US gasoline prices are at [$4.55 a gallon] and why the risk of $5 gasoline can no longer be dismissed,” the analysts wrote. The timing is brutal. Memorial Day, the unofficial start of the driving season, arrives at the end of May, just as families load up for road trips.

Consumer sentiment collapsed alongside the price charts. The University of Michigan’s May survey registered a record low of 48.2, missing economists’ already pessimistic forecast of 49.7. Director Joanne Hsu reported that roughly one-third of respondents spontaneously cited gasoline prices, while another 30 percent mentioned tariffs. “Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump,” she said.

The downstream consequences are piling up fast. Airlines have begun raising ticket prices and baggage fees; Spirit Airlines, unable to absorb the hit to its thin margins, shut down over the weekend. Middle East developments, Hsu added, “are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall.”

Washington’s reluctance to treat energy security as an urgent priority is now colliding with arithmetic that no longer bends to rhetoric. When refiners prioritize jet fuel for planes that must keep flying, drivers pay the difference at the pump, and consumer confidence craters. The question is no longer whether $5 gas is possible. It is how many more record-low sentiment readings it will take before policy makers treat it as the emergency it has become.

Original reporting: New York Post.