Why are gas prices and airline tickets rising?

As the Iran war enters its fifth week, consumers are being hit hard by soaring energy costs. Now, even as experts point to an extreme supply shock, some lawmakers are warning of the possibility of price gouging.

Traffic in the Strait of Hormuz, a critical shipping route for global oil supplies, remains virtually at a standstill, causing the biggest oil supply disruption in history.

Oil prices have soared more than 40% since the war between the United States and Iran began on February 28, causing soaring prices for gas and jet fuel.

Brent crude, the global benchmark for oil, fell on Friday after topping $112 per barrel. It was trading at about $103 as of Tuesday morning. The national average price for gasoline refined from crude oil reached $3.98 per gallon as of Tuesday, up about 35% from a month ago, according to AAA.

Jet fuel prices are up about 106% from a month ago, according to the International Air Transport Association, which measured data for the week ending March 20. Some airlines have already announced that they will raise fares or add fuel surcharges to tickets.

Sen. Elizabeth Warren (Massachusetts) is now asking the Federal Trade Commission to monitor companies that take advantage of consumers by jacking up prices unnecessarily during disputes.

“We write about our concerns that large corporations are seeking to profit from President Trump’s war on Iran by unfairly raising prices for American consumers,” Warren and several other members of Congress exclusively shared in a letter to FTC Chairman Andrew Ferguson on Tuesday.

In a letter also signed by Sen. Richard Blumenthal of Connecticut, Sen. Ed Markey of Massachusetts, Rep. Jan Schakowsky of Illinois and Rep. Chris Deluzio of Pennsylvania, the lawmakers said “companies could take advantage of this uncertainty to raise prices beyond what is justified by actual increases in input costs, driving up prices for everyday Americans.”

Price gouging occurs when sellers expand their profit margins by raising prices more than necessary to cover higher input costs, they said.

In 2025, Warren introduced the Price Gouging Act, which would give the FTC additional authority to sue for alleged wrongdoing. The bill has been in the Senate Commerce, Science, and Transportation Committee since mid-July. A similar bill co-sponsored by Warren in 2024 failed to pass.

Concerns about price gouging for oil, gasoline and fertilizer are particularly acute during the Iran war, the lawmakers wrote. But “increased input costs may also lead to higher downstream prices in other industries, including the food and aviation industries,” the letter said.

It takes about five to six weeks for crude oil to be processed and turned into gasoline for delivery, said Amy Myers Jaffe, director of New York University’s Energy, Climate Justice and Sustainability Laboratory. “This means that the gasoline that came out of refineries based on the more expensive crude oil received after the war started is finally starting to be shipped to gas stations.”

But some wholesalers may be buying gasoline on the spot market, in which case the price hike “would be instantaneous,” Jaffe said.

Ken Medlock, senior director of the Energy Research Center at Rice University’s Baker Institute, said these market conditions “don’t see any price gouging.”

“In fact, given the rapid changes in oil prices, changes in pump prices are consistent with historical norms,” ​​he said.

“The problem is that this is the largest nominal price increase we’ve ever seen in such a short period of time,” Medlock added.

Experts say it’s unclear how much price gouging will be a factor in airfares.

Jet fuel prices are a major input cost for airlines, accounting for about 25% of airlines’ total operating costs, excluding labor costs, according to an analysis of federal data by Jason Miller, a supply chain management professor at Michigan State University.

“The reality is that jet fuel prices have more than doubled over the past three weeks,” United Airlines CEO Scott Kirby said in a March 20 memo. “If prices remain at this level, we will be spending $11 billion a year in extra spending on jet fuel alone.”

Higher operating costs will ultimately lead to higher airfares, Helen McDermott, director of global forecasts at Tourism Economics, said in a March 19 research note.

However, the impact on prices will vary by airline, she wrote. Low-cost carriers tend to be more affected because jet fuel costs are a higher proportion of total costs, he wrote.

David Goodger, managing director and head of tourism forecasting at Tourism Economics, told CNBC that he expects airfares to rise “above normal” due to the Iran war.

“While the outlook remains uncertain, airfares are expected to be 5-10% higher than previously expected from 2026 to 2027,” Mr. Goodger said in an email.

Mr. Goodger said airlines may impose additional fuel surcharges as fuel prices continue to rise.

Courtney Miller, founder of airline industry advisory firm Visual Approach Analytics, previously told CNBC: “Airlines like to say you have to pay more because fuel is expensive. What they’re doing is setting expectations.” “They set prices to prevent empty seats.”

Ultimately, there are “too many unknowns” about the Iran war and its impact on energy markets, making it difficult to predict with any degree of certainty the impact on airfares, for example, said Katie Nastro, a spokeswoman for airline contract provider Going.

Nastro said there was also an element of consumer panic buying, which could further exacerbate price increases.

Nastro said average airfares for travel from April 20 to May 17, the post-spring break and pre-summer period, increased by a median of about 10% to 15% compared to prices just before the war started.

Fares for summer travel are also up about 18% compared to a year ago, she said.

“We’re doing temperature checks, but it doesn’t look very good,” Nastro said of airfares. “The temperature has risen.”