Policy Options to Address Gas Prices

President Trump has repeatedly reiterated his commitment to military strikes against Iran despite the short-term pain of rising oil prices. Last week, the President called higher gas prices short term and a “small price to pay” in order to end the military threat presented by Iran. However, this does not mean the administration won’t look for policies to alleviate gas price hikes, as today’s suspension of the Jones Act underscores. 

The following policy update explores options to reduce gas prices, including: 

• Securing the Strait of Hormuz

• Waiving the Jones Act or Exempting for Oil and Gas

• Further Tapping the Strategic Petroleum Reserve

• Allowing the Sale of Year-Round E15

• Granting Targeted Tariff Exemptions

• Easing Russian Sanctions

• Legislative Action to Reduce Energy Production Approval Times

Background on Rising Gas Prices

The ongoing conflict with Iran has led to oil supply disruptions as Iran has closed the Strait of Hormuz to the United States and Western allies. The Strait of Hormuz is a major waterway for oil markets, with 20 million barrels (or 20% of the global oil supply) passing through daily. The President has called on NATO allies to assist the U.S. in securing the Strait, but most have declined to get involved to date.

As of March 18, the AAA National Average gas price was $3.842 per gallon, while yesterday, diesel increased above $5 per gallon for the first time since December 2022. This is compared to a year ago, when gas prices averaged $3.07 per gallon for unleaded and $3.592 per gallon for diesel.

An overview of gas prices and the price of oil from January 2026 to March 18, 2026.

Policy Options to Reduce Gas Prices

The President has a number of policy options that could have varying impacts on oil prices. As most market observers have pointed out, these options may ultimately be insufficient to materially reduce gas prices in the face of such a large-scale economic disruption. That said, we believe that the White House understands the political importance of taking steps to curb price increases. 

Below is a non-exhaustive summary of some of the options that are available to the President and lawmakers in Washington, D.C. 

Securing the Strait of Hormuz

The most important thing that the U.S. can do is to gain control of the Strait of Hormuz. Iran has closed the strait to the U.S. and other Western nations and reportedly deployed mines to stop the flow of oil. If shipping can resume, or at least increase, through the Strait of Hormuz even as the conflict continues, oil prices are likely to decrease. Currently the U.S. International Development Finance Corporation (DFC) is providing political risk insurance to encourage shipping to continue in the Strait. According to a release, “DFC will offer support to commercial shipping charterers, shipowners, and key maritime insurance providers to minimize market disruptions and help ensure the free flow of goods and capital.” 

Additionally, the administration has floated the idea of U.S. Navy escorts for ships in the Strait but has not yet done so. The United Arab Emirates has said it could join U.S. efforts to protect shipping in the Strait, while as mentioned earlier, NATO allies have largely declined to get involved. In the meantime, Iran is still shipping limited supplies of oil through the strait. 

Waiving the Jones Act for 60 Days

Today, President Trump issued a 60-day waiver of the Jones Act with a White House statement saying the action “will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days.” The waiver underscores the White House’s desire to address fuel prices during the conflict with Iran. It also suggests additional actions could be forthcoming. 

The Jones Act requires that any merchandise transported within the U.S. by water must be transported on U.S.-built, U.S.-citizen owned, and U.S.-registered ships. In very rare instances of national defense, the Jones Act can be waived. The Jones Act has been waived in the past during natural disasters or other disruptions in the oil market, and the National Bureau of Economic Research estimates waiving the Jones Act could reduce gas prices on the East Coast by 63 cents per barrel. In total, the policy could lower costs by an estimated $769 million per year. According to the Department of Energy, Americans spend just over $1 trillion on petroleum annually. 

Further Tapping the Strategic Petroleum Reserve

Last week, the President approved the release of 172 million barrels of oil from the Strategic Petroleum Reserve (SPR). The release is part of the International Energy Agency (IEA) effort to release 400 million barrels of oil, the largest release in the agency’s history. This release will supplant oil from the Strait for 20 days from the date of the release. 

Prior to the authorized release, the SPR reportedly held over 415 million barrels of oil, with an estimated 243 million barrels remaining after the release. Energy Secretary Chris Wright said that the release could take up to 120 days to complete. 

Year-Round E15

Typically, E15 cannot be sold from June 1 to September 15 because it does not meet gasoline Reid vapor pressure requirements. E15, which is a fuel blend of 15% and 85% gasoline, is cheaper than regular gasoline. Last summer, the Environmental Protection Agency (EPA) issued the first nationwide waiver allowing for the year-round sale of E15, citing decreased refining capacity in the U.S. and “ongoing global conflicts.” Some members of Congress have renewed previous calls for year-round E15 in light of rising gas prices.

Granting Targeted Tariff Exemptions

One tactic that oil and gas industry leaders have repeatedly lobbied the White House to adopt is providing exemptions for oil and gas production components procured overseas. Oil and gas imports are already exempted from tariffs, but much of the machinery and pipe equipment necessary to extract and deliver domestic energy are built overseas and subject to tariffs. Drilling and pipeline companies are asking the Office of the U.S. Trade Representative (USTR) for exemptions to get projects moving faster. Like many of the proposed solutions, the impact of specific exemptions would take time to hit the pump.

Easing Russian Sanctions

The Trump administration has already taken some action to ease sanctions on Russian oil to address rising oil prices. U.S. sanctions on Russian oil will not apply for 30 days for any oil that has been loaded on tankers as of Thursday, March 12. The administration is also allowing India to purchase Russian oil without sanctions for 30 days for any oil loaded on vessels by March 5. 

Legislative Action to Reduce Energy Production Approval Times

The One Big Beautiful Bill Act (OB3) included numerous provisions requiring the issuance of new permits for drilling, exploration, and domestic energy production. There are still, however, pieces of legislation in Congress meant to speed up that production by reducing the time it takes to approve these projects and clear environmental permitting approval. The SPEED Act is a permitting reform bill that passed the House and is stuck in the Senate, where it once had bipartisan support. Again, even if the White House were to put its weight behind the bill, it would take a significant amount of time to impact prices at the pump.