The national average price of gasoline climbed to nearly $4.14 on Tuesday, up roughly $0.80 from a month ago, and JPMorgan analysts warned in a client note that the number could blow past $5 per gallon if the Strait of Hormuz remains effectively closed through mid-April.

A $5 national average would mark the highest pump price since June 2022 and, if sustained, could drain roughly $100 billion from consumer purchasing power this year. For metals investors, the transmission is direct: energy-driven inflation at this scale reshapes the Fed’s rate path, compresses real incomes, and strengthens the case for hard-asset hedges.

The strait, through which roughly 20% of the world’s oil flows, has seen shipping traffic largely halted since the war broke out on February 28. Iran has blocked the transit of vessels aligned with the United States and Israel, and as Yahoo Finance reported, Iran rejected the latest U.S. ceasefire proposal. President Trump responded by threatening further strikes on Iran’s bridges and infrastructure if the country did not make a deal and reopen the strait by 8 p.m. ET on Tuesday.

That deadline set the stage for a volatile week in energy markets. U.S. crude futures rose above $112 per barrel, Brent for June deliveries topped $109, and spot prices for oil shipments sold in the North Sea recently cleared $140, their highest level since 2008.

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The JPMorgan Math: Every Dime Costs $12 Billion

JPMorgan’s Joyce Chang and Natasha Kaneva laid out the consumer math in stark terms:

“To date, US retail gasoline prices have already increased to close to $4/gallon, but our commodity team sees a risk of that exceeding $5/gallon if the strait remains effectively closed by mid-April.”

The bank’s analysts estimated that every $0.10 increase in the average price of regular gasoline this year adds another $12 billion to annual gasoline spending. That is not a rounding error. It is the kind of incremental drain that shows up in consumer confidence surveys, discretionary spending, and eventually in GDP prints.

The second quote from the note drove the point home:

“Our US economics team estimates that the recent increase in the gasoline price, if it persists for the rest of this year, should amount to around a $100bn hit to consumers’ purchasing power.”

A hundred billion dollars of lost purchasing power does not vanish quietly. It reprices consumer behavior, corporate earnings guidance, and the political calculus around fiscal relief. As we noted in our coverage of the Fed’s Goolsbee warning, energy-driven inflation at this scale could push rate cuts well into the future, a dynamic that matters enormously for anyone holding duration-sensitive assets or counting on cheaper money to support equity valuations.

California Already Past the Pain Threshold

The national average tells only part of the story. On the West Coast, where higher fees, taxes, limited refining capacity, and reliance on imported refined fuel have put outsized upward pressure on prices, the numbers are far worse. Prices in California hovered at $5.92 per gallon on Monday. In San Francisco, motorists were already paying $6 at the pump.

Diesel costs in California hit a record high of $7.68 per gallon on Monday. That figure matters beyond the trucking industry. Diesel prices feed directly into the cost of moving food, building materials, and manufactured goods. When diesel spikes, the inflationary impulse radiates outward with a lag that policymakers often underestimate.

The disruption is not confined to the United States. Some smaller Asian countries were already reporting outages, reduced flights, and remote schooling as fuel supplies tightened. The fuel rationing spreading across Asia and Europe reflects the same supply shock hitting U.S. consumers, just at different points along the severity curve.

Washington’s Limited Toolkit

The White House is not standing still, but the available options are narrow. Breitbart reported that the administration is considering a temporary waiver of the Jones Act, a 106-year-old maritime law, to allow foreign-owned and operated oil and fuel tankers to move between U.S. ports. White House spokesperson Karoline Leavitt framed the discussion in national-defense terms:

“In the interest of national defense, the White House is considering waiving the Jones Act for a limited period of time to ensure vital energy products and agricultural necessities are flowing freely to U.S. ports.”

Experts cited in that report cautioned that any impact on consumer gas prices from a Jones Act waiver would likely be modest and temporary. The fundamental problem is not domestic logistics. It is the loss of 20% of global oil transit capacity through the strait. No cabotage waiver fixes that.

The administration’s One Big Beautiful Bill Act, referenced in the Yahoo Finance report, includes an expected tax benefit that could offset some of the consumer pain. But legislative timelines and energy-market timelines rarely align. Consumers feel the pump price today; tax relief arrives on a different schedule entirely.

What This Means for Metals

Gold investors should pay close attention to the mechanism at work here. An energy shock of this magnitude does several things simultaneously.

  • Inflation expectations rise. When gasoline moves from $3.30 to $4.14 in a month, households recalibrate their inflation outlook regardless of what the Fed’s preferred gauges say.
  • Real incomes compress. A $100 billion purchasing-power hit is a direct transfer from consumers to energy producers. That weakens demand for discretionary goods and services while keeping headline inflation elevated.
  • The Fed’s path narrows. Rate cuts become harder to justify when energy is feeding through into core prices. Rate hikes become harder to justify when consumer spending is weakening. The central bank gets stuck.
  • Geopolitical risk premiums expand. North Sea spot crude at $140, its highest since 2008, signals that physical markets are pricing in sustained disruption, not a quick resolution.

That combination of sticky inflation, weakening demand, and geopolitical uncertainty is precisely the environment where gold has historically attracted capital. Not because gold solves the problem, but because it sits outside the credit system that absorbs the damage. As we examined in our analysis comparing the current Iran posture to the 1970s energy shock, the parallels are uncomfortable and instructive.

The Strait as a Single Point of Failure

The Strait of Hormuz has always been the global energy system’s most dangerous chokepoint. What makes this episode different from past tensions is the duration. Shipping traffic has remained largely halted since February 28, more than five weeks as of the article’s publication date. Previous flare-ups around the strait tended to resolve or de-escalate within days. This one has not.

The longer the closure persists, the more second-order effects accumulate. Inventories draw down. Refining margins spike. Insurance costs for tankers in the region climb. And physical oil markets begin to diverge sharply from paper benchmarks, a dynamic that distorts price signals and makes hedging more expensive for producers and consumers alike.

Our earlier reporting on worst-case oil price scenarios tied to the strait disruption outlined the tail risks that remain in play. JPMorgan’s $5 gasoline warning sits well below the extreme end of that range, which makes it less a forecast and more a near-term base case if the standoff drags into mid-April.

The Purchasing-Power Question

For metals investors, the $100 billion purchasing-power estimate from JPMorgan deserves careful thought. That figure assumes the current gasoline price persists for the rest of the year. If prices push to $5 or beyond, the damage grows proportionally. And it lands on top of whatever tariff-related cost increases and fiscal adjustments are already working through the system.

When consumers lose purchasing power at this rate, the economy does not simply slow in a straight line. Spending patterns shift. Credit usage rises. Savings rates fall. And the political pressure on Washington to do something intensifies, which often means more intervention, more fiscal stimulus, and more monetary accommodation down the road. Each of those responses, in its own way, reinforces the case for owning assets that cannot be diluted by policy.

The June 2022 record of nearly $5.02 per gallon stands as the benchmark. If the strait remains closed, JPMorgan’s analysts see a clear path to matching or exceeding that level. The difference between 2022 and today is that the current shock is geopolitical rather than demand-driven, which means the Fed has even less ability to address it with interest-rate policy.

Gold does not produce energy. It does not solve supply-chain disruptions. But when the system that prices everything in dollars faces a simultaneous inflation shock and demand hit, the oldest monetary asset in the world tends to remind people why it exists.