High gas prices eating into Texans’ budgets, fueling inflation

The large signs outside gas stations across Texas intended to catch drivers' eyes are lately doing so for all the wrong reasons.

At a Valero gas station in Edinburg, Reynaldo Zarazoa, who installs tile for a living and has to haul tools and equipment around in his gray GMC pickup, watched Thursday as the display on the gas pump reached $78 — nearly a fifth of his weekly income.

"My work is cheap, and the gas is expensive," said Zarazoa, a father of two living in Peñitas, a small city in the Rio Grande Valley. "But I have to drive every day for work."

The price of fuel has risen significantly since the U.S.-Israel war on Iran began on Feb. 28, closing a key international shipping lane for oil and gas, the Strait of Hormuz. The average price for a gallon of gas in Texas was $2.55 in early February, according to AAA. It had risen to $3.78 on Wednesday morning.

Texans who rely on cars to get around are bearing the cost of the war at the gas pump, and high diesel prices are fueling rising inflation in other sectors of the economy.

"If I go grocery shopping one day, I'm definitely not going to get a full tank of gas the same day because it's so expensive," Asher McClafferty, a 20-year-old University of Texas student, said while filling up at an Austin gas station.

The average Texan now spends $223 per month on gasoline, according to a study published earlier this month by financial services company Motley Fool Money.

"It's all crazy," Victor Cortez, a 40-year-old Austin construction worker, said while filling up his pickup last week. "It depends on the day. Some days I'm moving to three or four buildings and spending 100 bucks a day."

President Donald Trump, who promised during his campaign that he would lower gas prices below $2 a gallon, has argued that the high cost of fuel is a temporary but necessary sacrifice, and prices will fall quickly once the war concludes.

The U.S., Israel and Iran are currently navigating a tenuous ceasefire, and shipping through the Strait of Hormuz — where 20% of the world's oil passes — is still far below pre-war levels as the threat of attacks on oil tankers remains. Oil and gas facilities located along the Persian Gulf were also damaged by Iranian missiles and drones, further elevating fuel prices.

Even if the Strait of Hormuz reopens completely in the near future, it would take weeks for the bottlenecked supply chain to stabilize. Even then, the market may continue to assign oil a "risk premium" that will keep it priced well above regular levels as long as the threat of war in the Middle East remains.

The price for a barrel of Brent crude, the international benchmark, was above $115 on Wednesday, compared to about $70 a barrel before the war began.

The U.S. Energy Information Administration forecast in early April that Brent crude will trade above $95 a barrel over the next two months, before falling to $80 a barrel in the summer and $70 a barrel in the fall. It said its forecast is based on assumptions about the duration of the Middle East conflict and reduced oil production.

'A lot of people are feeling it'

Polling firm KFF published a survey Wednesday that found that the cost of gasoline and other transportation has risen to become U.S. adults' top affordability concern, alongside health care. The poll found two-thirds of respondents said they are worried about being able to afford gas and transportation.

Cecilia Cano, who lives in Edinburg, said she has had to limit how often and how far she drives because of how high gas prices have climbed. She said it used to cost her $25 to fill up her white Toyota Sequoia, but last Friday it cost around $40.

She has grandkids who live in McAllen, and she said she has to weigh the cost of visiting them and taking them to school or their after-school activities.

Cano did not vote for Trump and blames his administration for high gas prices.

"I am disappointed; he hasn't kept any promises," she said. "They're high because of the war, and we didn't need a war, there was no need for it. And a lot of people are feeling it."

Fuel prices typically rise in the summer months as school lets out and people travel more. The high cost of gas is making some families rethink their travel plans.

Andrea Mehi was getting gas on Friday in Austin with her husband, Jeff Mehi, and their two young daughters. Both parents do not have to drive much for work and their daughters' school is near their home, but they said lingering high gas prices will affect their plans.

"We definitely have to reconsider those 'get away for the weekend' type of things and do them a little less frequently," Mehi said.

High diesel prices fuel inflation

The longer fuel prices remain high, the more those additional costs will flow through the rest of the economy. Diesel fuel — which has jumped from $3.30 a gallon in early February to about $5 on Wednesday — powers the trucks, trains and ships that move consumer goods across the country. Diesel also powers most farm and construction equipment.

Driven largely by rising fuel costs, consumer prices nationally rose 3.3% in March compared to a year earlier, the biggest annual increase of inflation since May 2024, according to the U.S. Labor Department.

The main expenses for a trucking company are drivers' pay and diesel, said John Esparza, president and CEO of the Texas Trucking Association.

"It's always a battle between labor and fuel, those are the two highest costs to operate an 18 wheeler," Esparza said. "You could argue now, that's switched to fuel, then labor."

About half of the truckers in Texas are independent operators who purchase diesel at gas stations and truck stops and don't get the discounted fuel prices that big companies with their own trucking yards can receive for buying in large quantities.

Esparza said he does not think the high cost of diesel will put many operators out of business, but he knows the increasing cost of transporting goods is already flowing through to consumers.

Emanuel Siah, a nursing assistant in Austin, said his family is spending $150 a week on gas for two cars. Siah was buying $20 worth of gas on Friday afternoon and said the roughly five gallons of gas would not get him very far.

"It's killing us, man," Siah said. "And it's because of Trump."

Evan Hegarty, a 42-year-old who lives in Austin with his wife and child, said the city is already expensive without high gas prices.

"We're really spending most of the extra money we have on food and things like gas," he said. "And gas prices going up is causing food prices to go up, which probably impacts me more than the hand on the pump does."

Disclosure: Valero has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article first appeared on The Texas Tribune.