Bank of America raises red flag on summer gas prices

Every American household runs on a quiet routine. You fill up on the way to work, again on the way home from soccer practice, again before the long weekend road trip. The receipt slides into the cup holder and gets forgotten. Until it does not.

I have been tracking pump receipts in my own family budget for the past decade, and the swings I am watching right now look different from anything since 2022.

The national average ticked above $4.50 a gallon on May 6, up roughly 25 cents in seven days, reported AAA. Drivers in California are now staring down $6.16 a gallon, while parts of the Pacific Northwest sit just under $5.75, AAA's state-by-state averages show.

That kind of move turns a routine into a line item. For a household running a tight budget, an extra dollar a gallon translates to roughly $25 a week per car, depending on how much you drive, before any summer road trips get factored in.

And the country's second-largest bank just told its clients the line item is not going away anytime soon.

What Bank of America sees coming for gas prices

A May 6 note from Bank of America Securities lays out a forecast no one road-tripping toward Memorial Day weekend wants to read. The note ran in a brief by news editor Rob Williams.

Stephen Juneau, the bank's U.S. economist, walked clients through a regression model built off current crude oil futures contracts. Futures prices "suggest that consumers may not see meaningful relief for a while," wrote Juneau, according to Seeking Alpha.

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The model points to gasoline staying anchored near $4 a gallon through the summer driving season, even with seasonal refinery maintenance in the rearview mirror.

The futures-based approach matters here. Crude contracts price what big oil buyers and producers are actually willing to commit to weeks and months out, which makes them a cleaner signal of where the floor sits than retail surveys alone. When the futures curve barely budges, retail relief usually does not arrive on its own.

That sits in line with the bank's broader 2026 oil call. Bank of America (BAC) commodities strategist Francisco Blanch had already warned the Iran conflict "wiped out" the global energy surplus, reported Investing.com. The bank lifted its Brent crude forecast to $77.50 per barrel for the year, with the second quarter averaging $80.

The harsher scenarios are louder. Brent could average $100 in a more severe outcome and stretch as high as $130 if Middle East disruptions linger into late 2026, BofA told clients, per Investing.com.

Translation for your wallet: Even the bank's mid-case forecast assumes the pump pain lingers.

Photo by Grace Cary on Getty Images

Why summer gas prices are stuck near $4 a gallon

The story underneath the BofA note is geopolitical, and it is layered on top of a U.S. refining base that has been quietly shrinking for two years.

Brent crude shot toward $115 a barrel in March after the late-February escalation between Israel, the U.S., and Iran led to the intermittent closure of the Strait of Hormuz.

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That waterway carries close to 20% of the world's daily oil flow, reported Brookings. When it gets pinched, the global market reprices in days, not months.

The supply-side problem started before the war. The Phillips 66 (PSX) refinery in Los Angeles shut for good in late 2025, and the LyondellBasell (LYB) plant in Houston followed, thinning U.S. capacity to convert crude into finished gasoline, reported FinancialContent. Fewer refineries mean fewer shock absorbers when global oil moves.

It also means the country entered this year with a forecast that aged poorly. GasBuddy had pegged 2026 as a sub-$3 year for the national average back in December, before any of the Middle East flare-up was on the radar. The reality is now a dollar and a half higher.

The numbers below show what that translates to at the retail level right now.

Where pump prices stand

• National average: $4.536 a gallon as of May 6
• California: $6.16 a gallon (the state high)
• Washington: $5.747 a gallon
• Hawaii: $5.657 a gallon
• Oklahoma: $3.962 a gallon (the cheapest state)
  
  Source: AAA

Gas prices climbed 21.2% in March alone, the largest single-month Consumer Price Index move since the index launched in 1967, reported Empower using federal data.

What pricier gas means for your household budget

Here is the part of the BofA note that should land hardest with the average reader.

Gasoline demand is what economists call "inelastic." Even when prices climb, you still drive to work, and you still fill up before the school run. Spending at the pump rises in lockstep with prices and cannibalizes the rest of the budget, according to the BofA note relayed by Seeking Alpha.

When I ran the new AAA national average against household pump data, the math got uncomfortable. Drivers were already shelling out about $198.50 a month at $45.70 per transaction in March, reported Empower. At $4.50-plus, that monthly tab climbs an extra $30 to $50 for a typical two-car household before any summer road trips.

The second-order risk sits one shelf over. Diesel powers the trucking and farm equipment that brings food to your local grocery store, and food-at-home inflation has already climbed nearly 0.4% in a month, reported FinancialContent. Pricier gas now means pricier groceries in a few weeks.

The Fed will have to manage that. Central bankers usually look past energy shocks, but sticky food inflation tends to bleed into rate decisions, which is why a December cut now looks more like a coin flip than a sure thing.

The behavioral data are starting to show the squeeze. Foot traffic at sit-down dining chains, electronics retailers, and home-improvement stores has cooled in recent weeks as fuel costs eat into discretionary income, reported FinancialContent. Kroger has rolled out aggressive fuel-points promotions, and enrollment is at record levels.

For households, the playbook is unsexy, but it works. Lock in fuel rewards programs at your grocery chain. Combine errands. Watch for state-level gas-tax holidays from governors who do not want to face midterm voters with $5 pumps.

And keep an eye on the Strait of Hormuz, because BofA's worst-case scenarios all start there.

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This story was originally published May 10, 2026 at 8:33 AM.