The price of gas is at a three-year high

Summary

Marketplace Morning Report: "The price of gas is at a three-year high"

Date: March 31, 2026
Host: Sabri Benishore (in for David Brancaccio)
Duration: ~8 minutes (excluding ads, outro)

---

Episode Overview

This episode focuses on the economic ripple effects of rising gas prices, which have hit a three-year high in the United States amid international tensions. Experts discuss how elevated fuel costs are impacting household finances, the effect on tax refunds following new tax cuts, and the challenges facing car owners with negative equity in their vehicles. The episode offers concise, data-driven insights on current business and economic issues.

---

Key Discussion Points & Insights

1. Gas Prices Reach a Three-Year High

[00:01 – 01:45]

• Global Context: President Trump signals willingness to end the war with Iran without reopening the Strait of Hormuz, keeping oil supply routes blocked.

• Oil Prices: Remain elevated at $115/barrel, influencing gas prices.

• Average U.S. Gas Prices:

  • Breached $4/gallon nationally for the first time since 2022.
  • Examples: $4.12 in Florida, $5.89 in California, Northeast just below $4.

• Diesel Prices: Increased from $3.76 (pre-war) to $5/gallon.

• Economic Implications: Diesel, essential to trucking and agriculture, could spread cost increases through the broader economy.

• Consumer Impact: 55% of respondents in a Reuters survey reported negative financial impact from rising fuel costs.

  Notable Quote:

  • Nova Safo [00:45]:

    "Some analysts consider the $4 per gallon gasoline price a key psychological barrier above which consumers begin to shift behavior."

---

2. Higher Tax Refunds vs Higher Gas Prices

[01:45 – 04:44]

• Tax Refunds Up:

  • Due to 2025 tax cuts, average refunds have increased by 10-11% (~$3,600 per filer), totaling an estimated $60 billion boost.

• Offset by Gas Costs:

  • Experts suggest that elevated gas prices act like a "new tax" on consumers, potentially negating the economic stimulus from higher refunds.
  • If gas stays at $4/gallon, increased prices could more than offset refund benefits.

  Notable Quotes:

  • Bill Pierce, Oxford Economics [02:34 & 02:55]:

    "An increase in gasoline prices driven by this war is essentially a new tax on consumers."
    "If they [gas prices] remain there for the rest of the year, then we're going to see that the increase in gas prices more than offset any boost to consumer spending from these tax refunds."

  • Kathy Bastiancik, Nationwide [03:10 & 03:24]:

    "It provides some cushion to this energy shock. Otherwise the hit to consumer could be much deeper."
    "Right now my gasoline prices went up, so all of the extra money I got from the refunds is going into the gas tank instead of going out to dinner or buying a gift or going on vacation, things like that."

• Debt & Resilience:

  • Jeff Korzenik, Fifth Third Commercial Bank, points out that average consumer debt is low, allowing some to better absorb price shocks.
  • Yet, many struggle due to high housing costs, especially renters and recent homebuyers with higher mortgage rates.

  Quotes:

  • Jeff Korzenik [03:46 & 03:59]:

    "The consumer can absorb price shocks more readily than if they were stretched out on debt."
    "If you're a renter, you felt the pain of rent increases. If you've been a new buyer in the last couple years, you've paid much higher mortgage interest rates."

• Spending & Economic Outlook:

  • Consumer spending is expected to slow, softening economic growth, with ongoing upward inflationary pressure.
    • Jeff Korzenik [04:14]:

      "Our base case is still continued expansion in the US economy, but more modest growth than we would have otherwise had."

---

3. The ‘Upside Down’ Car Loan Problem

[05:38 – 07:11]

• Negative Equity on Car Loans:

  • About one-third of people trading in cars owe more than their vehicle’s current worth (i.e., are "underwater" or "upside down"), per JD Power.

• Reasons for the Trend:

  1. New Car Prices Up: Few manufacturers offer cars under $30,000, driving up average prices.
     • Sam Fiorani, Auto Forecast Solutions [06:08]:

       "We're seeing fewer and fewer manufacturers offering vehicles under $30,000. Competition has been pushing price up and nobody is filling the gap at the bottom."

  2. Cars Depreciate Quickly:
     • Sam Fiorani [06:23]:

       "As soon as you drive it off a lot, you owe more than it is worth."

  3. Longer Loan Terms:
     • 36-month loans now lengthened to 72 months, meaning it takes longer to build equity.
     • Tyson Jomini, JD Power [06:38]:

       "Longer loans mean it takes longer for cars to be worth more than what you owe on them, which over a decade of ownership wouldn't be an issue."

     • Sam Fiorani [06:48]:

       "Consumers still return to market pretty consistently around four years."

• Dealer Practices:

  • Many dealerships offer incentives that cover negative equity, making it easier for buyers to trade in underwater cars.

---

Memorable Quotes – Quick Reference

• Nova Safo [00:45]: "Some analysts consider the $4 per gallon gasoline price a key psychological barrier above which consumers begin to shift behavior."
• Bill Pierce [02:34]: "An increase in gasoline prices... is essentially a new tax on consumers."
• Kathy Bastiancik [03:24]: "All of the extra money I got from the refunds is going into the gas tank instead of...going out to dinner or buying a gift or going on vacation."
• Jeff Korzenik [03:46]: "The consumer can absorb price shocks more readily than if they were stretched out on debt."
• Sam Fiorani [06:08]: "We're seeing fewer and fewer manufacturers offering vehicles under $30,000. Competition has been pushing price up, and nobody is filling the gap at the bottom."

---

Timestamps for Significant Segments

• 00:01 – 01:45: Gas prices hit a three-year high; global, national, and economic context.
• 01:45 – 04:44: Tax refund boost and gas price offset; how rising costs impact households and the broader economy.
• 05:38 – 07:11: The problem of underwater car loans; reasons behind the trend and potential outcomes.

---

This episode offers a rapid but thorough look at how global tensions and domestic policies interplay to impact Americans' everyday financial realities, from the gas pump to the car dealership.

Transcript

[Sabri Benishore]

The price of gas is at a three year high. From Marketplace, I'm Sabri Benishore, in for David Brancaccio. President Trump has reportedly told White House aides he is willing to end the war with Iran without reopening the Strait of Hormuz, through which a fifth of the world's oil supply normally moves. This is according to the Wall Street Journal. The president had previously threatened to use force to open the strait, which would have meant a significant escalation such as stock futures rallied on the news. The price of oil, however, is still elevated $115 a barrel, and the average price of gas is now above $4 a gallon for the first time since 2022. Marketplace's Nova Safo has more on that.

[Nova Safo]

Some analysts consider the $4 per gallon gasoline price a key psychological barrier above which consumers begin to shift behavior. We breach that milestone overnight. The average national price for a gallon of regular as tracked by aaa rose from $3.99 to $4.02. That's nationwide. Prices vary a lot by state $4.12 in Florida, $5.89 in California. Much of the Northeast is just shy of $4. Diesel prices nationally are up from $3.76 before the war to $5. 4. Diesel is the primary fuel for big trucks, freight trains and farm equipment, meaning large price swings could filter through to other areas of the economy. Rising gasoline prices were already hurting households 55% of respondents to a Reuters survey a week ago said their finances had taken a hit. I'm Nova Safo for Marketplace.

[Sabri Benishore]

Tax day is in two and a half weeks and the average tax refund will be higher this year because of the 2025 tax cuts. A lot of could really use that money and it would normally be a little economic boost for consumers. Enter higher gas prices than NOVA was just talking about and depending on how things go economically speaking, it could all just end up being a wash. Marketplace's Justin Ho looked into it.

[Michael Pierce]

The new tax law is on track to boost refunds this year by roughly $60 billion compared to last year, says Michael Pierce, chief US economist at Oxford Economics.

[Bill Pierce]

And the average refund so far has been something like $3,600 per claiming, so that's up about 10 or 11% from year ago levels.

[Michael Pierce]

Problem is those tax benefits start to look a little slimmer when you factor in rising gas prices.

[Bill Pierce]

An increase in gasoline prices driven by this war is essentially a new tax on consumers. So one way of thinking about it is this is offsetting some of the benefits that are coming from this tax cut.

[Michael Pierce]

Bill Pierce says those benefits will be completely offset if gas Prices average around $3.60 a gallon over the course of this year. And right now gas prices are around $4 nationally.

[Bill Pierce]

If they remain there for the rest of the year, then we're going to see that the increase in gas prices more than offset any boost to consumer spending from these tax refunds.

[Michael Pierce]

That said, another way of looking at this is that the bigger refunds are helping people afford to spend more on gas.

[Kathy Bastiancik]

It provides some cushion to this energy shock. Otherwise the hit to consumer could be much de.

[Michael Pierce]

Kathy Bastiancik is chief economist at Nationwide. She says the problem with that argument is that people basically have to spend more money on gas.

[Kathy Bastiancik]

Right now my gasoline prices went up, so all of the extra money I got from the refunds is going into the gas tank instead of going out to dinner or buying a gift or going on vacation, things like that.

[Michael Pierce]

Not every consumer is going to cut back. Jeff Korzenik is chief economist at Fifth Third Commercial Bank. He says that's because consumer debt levels on average are historically low right now,

[Jeff Korzenik]

and that means that the consumer can absorb price shocks more readily than if they were stretched out on debt.

[Michael Pierce]

But Korsenik says many consumers are struggling with debt, especially since housing costs are so high.

[Jeff Korzenik]

If you're a renter, you felt the pain of rent increases. If you've been a new buyer in the last couple years, you've paid much higher mortgage interest rates.

[Michael Pierce]

Korzenik says he expects consumer spending to slow down over the course of this year, which means economic growth will slow too.

[Jeff Korzenik]

Our base case is still continued expansion in the US economy, but more modest growth than we would have otherwise had.

[Michael Pierce]

And Corzinek expects that inflation will continue to rise. I'm Justin Ho for Marketplace.

[Dell PC Advertiser]

Dell PCs with Intel inside are built for the moments that matter. For the moments you plan and the ones you don't. Built for the busy days that turn into all night study sessions. The moment you're working from a cafe and realize every outlet's taken. The times you're deep in your flow and the absolute last thing you need is an auto update throwing off your momentum. That's why Dell builds tech that adapts to the way you actually work. Built with long lasting battery so you're not scrambling for the closest outlet. And built in intelligence that makes updates around your schedule, not in the middle of it. They don't build tech for tech's sake, they build it for you. Find technology built for the way you work at Dell.com/Dell PCs built for you.

[Sabri Benishore]

Let's say you want to trade in your old car for a new one, but you have not paid the old one off yet and actually the old one is worth less than what you still owe on it. That is called being underwater or upside down. And roughly a third of people trading in their old cars are underwater on their car loans. That is according to JD Power. Marketplace's Kaylee Wells explains.

[Kaylee Wells]

We've got three reasons this is happening. One, new cars have gotten way more expensive, says Sam Fiorani with Auto Forecast Solutions.

[Sam Fiorani]

We're seeing fewer and fewer manufacturers offering vehicles under 35 under $30,000. Competition has been pushing price up and nobody is filling the gap at the bottom.

[Kaylee Wells]

And unlike a house, whose value typically increases over time, with a car, as

[Sam Fiorani]

soon as you drive it off a lot, you owe more than it is worth.

[Kaylee Wells]

The second issue car loans are getting longer.

[Sam Fiorani]

We went from everyone having 36 month loans at the beginning of the century to now the average consumer is essentially

[Jeff Korzenik]

in a 72 month loan.

[Kaylee Wells]

Tyson Jamini at JD Power says longer loans mean it takes longer for cars to be worth more than what you owe on them, which over a decade of ownership wouldn't be an issue.

[Sam Fiorani]

But no matter what kind of loan consumers have or how long it gets, consumers still return to market pretty consistently around four years.

[Kaylee Wells]

Jomini says this trend won't hurt car dealers much since they often provide incentives that clear the old car's balance so buyers can afford a new one. I'm Kailey Wells for Marketplace and in

[Sabri Benishore]

New York, I'm Sabree Benishore with the Marketplace Morning Report. From APM American Public Media.

[David Brancaccio]

Hey, David Brancaccio here. I hope you're well and that your passport is up to date because I am hosting a trip to Italy this fall and you you are invited stay at a world class Tuscan villa and step into the world of the Medici, the formidable family whose influence and power helped give rise to the Renaissance and the art we still celebrate today. And not to mention the banking system. We're going to visit the world's oldest bank, swim in the thermal spa waters in Montecatini and take in the art of the Uffizi. All of this and then we'll try to put it all into context with great conversation over even better meals and wine tasting. Please join me and know this Buying into this trip will provide essential support for public media. Discover more about this fall's tuscany [e-mail] travel to reserve your spot today that's Marketplace Org Travel.