Rising fuel costs in 2026 could significantly reduce the financial benefits promised under President Donald Trump’s One Big Beautiful Bill Act, according to new economic analyses. While the administration has highlighted larger tax refunds this year, economists caution that higher gasoline prices may effectively cancel out those gains for many households.
The concern centers on how gas prices offset tax refunds, particularly as geopolitical tensions disrupt global energy markets. Early estimates suggested that tax changes would deliver hundreds of dollars in additional refunds to U.S. households. However, those gains are increasingly at risk as fuel costs climb.
A Refund Boost That Could Disappear at the Pump
The White House described the current filing season as the largest tax refund cycle in U.S. history, driven by revisions introduced under the One Big Beautiful Bill Act. According to projections from the Tax Foundation, the average household could receive roughly $748 more in refunds compared with prior years.
Yet a separate analysis from the Stanford Institute for Economic Policy Research suggests that increased fuel costs may absorb nearly all of that benefit. If oil prices remain elevated and supply disruptions persist, the average household could spend approximately $740 more on gasoline in 2026.
This near one-to-one offset highlights the fragile nature of consumer gains tied to fiscal policy when external cost pressures, such as energy, rise sharply.
Oil Shock and the Strait of Hormuz Disruption
At the center of the price surge is the ongoing conflict involving Iran, which has led to the effective closure of the Strait of Hormuz. The passage is critical to global energy supply, handling more than one-fifth of the world’s exported oil.
Since late February, gasoline prices in the United States have risen by more than 90 cents per gallon, reaching levels not seen since 2023. Crude oil prices have fluctuated near $100 per barrel, with recent spikes exceeding $115.
Even if the conflict de-escalates in the coming weeks, analysts warn that supply chains will take time to stabilize. Oil tankers remain backlogged, and infrastructure damage in key production regions may further delay recovery.
“Almost Exactly Offsetting” Consumer Gains
Economists at Oxford Economics estimate that Americans could spend an additional $60 billion on gasoline this year if prices average around $3.60 per gallon. That increase would be “almost exactly offsetting the boost from refunds,” the firm noted in a recent client briefing.
The impact is not evenly distributed. Lower- and middle-income households allocate a larger share of their budgets to fuel, making them more vulnerable to price increases. For many families, gasoline accounts for close to 4 percent of total spending, roughly double the share for higher-income households.
At the same time, several provisions in the tax legislation, including adjustments to overtime taxation and state and local tax deductions, are expected to benefit middle- and upper-income earners more significantly. This dynamic could widen existing economic disparities, reinforcing what analysts describe as a bifurcated consumer landscape.
Will Policy Measures Make a Difference?
The administration has introduced measures aimed at easing fuel costs, including a temporary suspension of the Jones Act, which regulates domestic shipping. The policy change is intended to increase flexibility in transporting oil and reduce logistical bottlenecks.
However, policy experts remain skeptical about its impact. Estimates from the Center for American Progress suggest the move could lower gasoline prices by only a few cents per gallon.
Meanwhile, Vice President JD Vance is expected to engage with energy executives to explore additional solutions. Still, structural challenges in global supply and ongoing geopolitical risks may limit the effectiveness of short-term interventions.
A Longer Road to Price Stability
Forecasts from the Energy Information Administration indicate that gasoline prices are likely to remain elevated through at least the end of the year, averaging above $3 per gallon into 2027. Investment bank Goldman Sachs has similarly projected sustained oil prices above $100 per barrel if supply disruptions persist.
For consumers, the outlook suggests that relief may not come quickly. Even if tax refunds increase on paper, the broader cost environment, particularly energy, will play a decisive role in determining real purchasing power.
