The Ceasefire Paradox: Why Gas Prices Are Still High

As of today, May 6, 2026, the national average for regular gasoline has climbed to $4.54 per gallon. While news out of the Strait of Hormuz suggests a temporary pause in “Project Freedom” due to potential progress in Iran negotiations, drivers are right to be frustrated. If the worst of the conflict is behind us, why are prices still at a multi-year high?

1. The “Rockets and Feathers” Effect

Economists have a name for this phenomenon: “Rockets and Feathers.” When geopolitical news is bad, gas prices shoot up like a rocket. When news is good, prices drift down like a feather. Gas stations and refineries are managing “inventory risk.” They purchased their current fuel at peak prices during the height of the Strait of Hormuz blockade. They are hesitant to lower their signs until they can restock with cheaper, post-ceasefire fuel—a process that is not instantaneous.

2. The Latest EIA Inventory Shock

This morning’s EIA report released on May 6 confirms why prices are “sticky.” U.S. gasoline inventories fell by 2.5 million barrels last week, which was significantly higher than analysts expected. Demand remains resilient despite the high prices, and refinery utilization is struggling to keep pace. Even with tankers moving again, the physical supply of gasoline in the U.S. is at a deficit compared to the five-year average.

3. The Reality of the “New Baseline”

We are operating in a fundamentally different energy environment than we were in early 2026. Global supply chains have been forced to diversify, and shipping insurance premiums—elevated due to the Strait of Hormuz conflict—remain high. Even as the Strait reopens, the cost to move energy globally has increased. Do not expect an immediate return to sub-$3.00 prices; we have entered a period of higher-baseline fuel costs that will likely persist through the summer travel season.