As Iran war causes gas and airfares to spike, lawmakers warn of price gouging — but experts point to supply shocks

With the Iran war in its fifth week, consumers are getting hit hard by surging energy costs. Now, some lawmakers are warning of the potential for price gouging, even as experts point to extreme supply shocks.
Traffic through the Strait of Hormuz, a critical maritime shipping route for global oil supplies, remains effectively at a standstill, causing the biggest oil supply disruption in history.
Oil prices have soared more than 40% since the start of the U.S.-Iran war on Feb. 28, triggering price spikes for gas and jet fuel.
Brent crude, the global benchmark for oil, topped $112 a barrel on Friday before retreating. As of Tuesday morning, it was trading at about $103. Gasoline, which is refined from crude oil, reached a nationwide average of $3.98 a gallon as of Tuesday, up about 35% from a month ago, according to AAA.
Jet fuel prices are up about 106% versus a month ago, according to the International Air Transport Association, which measured data for the week ended March 20. Already, some airlines said they will increase fares or tack on fuel surcharges to tickets.
Elizabeth Warren targets price gouging
Sen. Elizabeth Warren, D-Mass., is now urging the Federal Trade Commission to watch for businesses trying to take advantage of consumers by raising prices more than necessary amid the conflict.
"We write regarding our concerns that big corporations may seek to profit off President Trump's war against Iran by unfairly raising prices for American consumers," Warren and several other lawmakers wrote in a letter sent Tuesday to Andrew Ferguson, chair of the FTC, and shared exclusively with CNBC.
In the letter, also signed by Sen. Richard Blumenthal, D-Conn., Sen. Ed Markey, D-Mass., Rep. Jan Schakowsky, D-Illinois, and Rep. Chris Deluzio, D-Pa., the lawmakers said, "corporations may capitalize on this uncertainty to hike prices more than is warranted by actual input cost increases, price gouging 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 Prevention Act to give the FTC additional authority to litigate alleged abuses. The legislation has been with the Senate Committee on Commerce, Science and Transportation since mid July. A similar bill co-sponsored by Warren in 2024 failed to pass.
Amid the Iran war, price gouging concerns are particularly acute for oil, gasoline and fertilizer, the lawmakers wrote; however, "rising input costs could also lead to downstream price increases in other industries, including the food and airline industries," the letter said.
Why gas prices are rising so quickly
As a rule of thumb, it takes five to six weeks for crude oil to be processed and turned into gasoline for delivery, according to Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University. "That means that gasoline moving out of refineries based on higher-priced crude oil they received after the war started is only now starting to be shipped to gasoline stations."
However, some wholesale dealers might be buying gas on the spot market and, in that case, the price spike "would be instantaneous," Jaffe said.
Because of these market conditions, "there is no price gouging that I can see," according to Ken Medlock, senior director at the Center for Energy Studies at Rice University's Baker Institute.
"In fact, the changes in prices at the pump are consistent with historical norms, given the rapid change in crude oil price," he said.
"The issue is that this is the largest nominal price increase we have ever seen in such a short period of time," Medlock added.
Jet fuel prices drive airfares up
It's unclear to what extent price gouging could be a factor in airfares, experts said.
Jet fuel prices are a major input cost for airlines, accounting for about 25% of airlines' total operating costs, excluding labor, according to an analysis of federal data by Jason Miller, a professor of supply chain management at Michigan State University.
"The reality is, jet fuel prices have more than doubled in the last three weeks," United Airlines CEO Scott Kirby wrote in a March 20 note. "If prices stayed at this level, it would mean an extra $11 [billion] in annual expense just for jet fuel."
Higher operational costs will ultimately feed through to higher airfares, Helen McDermott, director of global forecasting at Tourism Economics, wrote in a March 19 research note.
However, price impacts will vary by airline, she wrote. Low-cost carriers tend to see more impact, as jet fuel costs are a higher share of total costs, she wrote.
David Goodger, a managing director and head of tourism forecasting at Tourism Economics, told CNBC he expects airfares to rise "more than would otherwise be the case" due to the war in Iran.
"While the outlook remains uncertain, we expect air fares will be 5-10% higher than we previously expected over 2026 and 2027," Goodger wrote in an e-mail.
Airlines may impose additional fuel surcharge fees amid prolonged spikes in fuel costs, Goodger said.
"Airlines love to say fuel is expensive so you have to pay more. What they're doing is they're setting the expectation," Courtney Miller, founder of Visual Approach Analytics, an airline industry advisory firm, previously told CNBC. "They price to prevent empty seats."
Ultimately, there are "too many unknowns" surrounding the Iran war and impact on energy markets, for example, to predict airfare impacts with much certainty, according to Katy Nastro, a spokesperson at Going, a flight deal provider.
There may also be an element of panic-buying among consumers, further exacerbating price increases, said Nastro.
Average airfare for travel between April 20 and May 17 — the period after spring break but before summer — has increased about 10% to 15% at the median, relative to prices just before the war started, Nastro said.
Fares for summer travel are up even more — about 18% — versus a year ago, she said.
"We're taking the temperature check, and it's not looking good" for airline prices, Nastro said. "The temperature is rising."
The affordability issue
The expanding U.S. war in the Middle East has amplified cost-of-living concerns ahead of the 2026 midterm elections.
Now, both Democrats and Republicans are focusing on affordability in the lead-up to November, according to recent reports — with good reason.
Even before the war, a December CNBC All-America Economic Survey found that the high cost of goods was the top concern among consumers, and that many voters surveyed have soured on the state of the economy.
Since then, surging energy costs — and the pass-through effects — have only made life more expensive.