Crisis and war are good for oil companies. Prices spike. Consumers pay more. Companies walk away richer than before.
It happened during COVID-19, when supply chain chaos sent prices soaring across the economy. According to the Federal Reserve Bank of St. Louis, non-financial corporate profits as a share of GDP jumped from 13.9 percent before the pandemic to 16.2 percent after—meaning companies weren’t just passing along higher costs. They were padding their margins.
It happened during the 2022 oil-and-gas shock following the Russian invasion of Ukraine, too. One study shows that the 2022 crisis generated record global fossil-fuel profits, slowing the green energy transition and contributing significantly to inflation. Half of these added profits went to the richest 1 percent of Americans via stock holdings, while the bottom half of earners received just 1 percent of the gains—widening economic inequalities. In February 2023, British Petroleum pulled back on its climate commitments as its profits hit record highs.
The same pattern appears to be repeating itself in this latest crisis, as the U.S. and Israel bomb Iran. According to The Wall Street Journal, in 2026, shares of energy firms in the S&P 500 are collectively up 26 percent, compared with a 1.5 percent year-to-date decrease in the broader index. U.S. liquefied natural gas exporters Cheniere Energy and Venture Global stand to benefit from higher prices abroad, as foreign buyers desperately bid to secure what fuel is available.
The market fails
For markets to work fairly, buyers need to know what things cost. When a crisis hits, they don’t. Consumers cannot tell if a price hike reflects a seller’s cost increase versus opportunistic margin-padding. So, when a refiner jacks up prices during a war, most people assume costs went up by the same amount. They eat the difference without knowing it.
That’s understandable for ordinary consumers. It’s less forgivable when business reporters at major newspapers do the same thing.
Here’s how The New York Times covered the gas price spike last week: “By Friday, domestic crude oil futures had gained more than 30 percent since the conflict began on Feb. 28, an increase that oil refiners have passed on to consumers at the pump, or to businesses in the form of increased diesel costs.” [Emphasis added]
The implication is that oil refiners are simply passing through 100 percent of their cost increases to gas stations, which in turn are passing that heightened cost dollar-for-dollar to consumers in the form of higher gas prices.
Except that framing doesn’t hold up. And it fits a pattern in mainstream business reporting that places the blame for price hikes on everything except the companies raising prices. The same New York Times reporter issued an update over the weekend, which allowed for the possibility that rising refiner profits could—just maybe!—be related to higher retail gas prices: “Though oil prices make up the largest share of the cost of gasoline—about 60 percent—taxes, refining margins, and distribution costs can raise prices further.”
The math doesn’t add up
We don’t have to speculate. We can check the receipts from the last energy crisis.
When Russia invaded Ukraine in February 2022, crude oil prices rose by about 71 cents per gallon. But retail gas prices jumped roughly $1.50 per gallon. That’s a 79-cent gap—pure profit for refiners and gas stations, pocketed under the fog of war.
California’s Division of Petroleum Market Oversight (DPMO) confirmed this finding in an October 2025 report: Every price spike they studied—2019, 2022, 2023—also constituted a profit spike. Retail prices surged well beyond what increases in crude oil costs could explain. And when wholesale prices eventually dropped, gas stations kept their prices high, also to their windfall.
So, what about the current crisis? It’s early, but the numbers are telling.
As of March 10, gas prices had climbed 50 cents per gallon since the Iran operation began on March 1, from $3.00 to $3.50 per gallon, according to AAA. Meanwhile, ignoring a temporary blip on March 9, crude oil are up about $20 per barrel over the same period, which works out to roughly 47 cents per gallon. So far, the pass-through looks roughly one-to-one. But gasoline futures have already outpaced crude, jumping around 80 cents per gallon. Because futures affect spot markets, which affect wholesale prices, which eventually hit the pump, consumers will likely see prices climb higher. And, if history is any guide, they’ll stay elevated long after wholesale costs retreat.
This is your price. This is your price on crack
If refiners were simply passing along higher costs, their profit margins would be steady throughout a crisis. They aren’t.
The measure of refiner profitability is called the crack spread: the difference between the cost of crude oil and the prices at which refined products like gasoline and diesel sell. The common benchmark, the “3-2-1 spread,” assumes three barrels of crude to produce two barrels of gasoline and one of diesel.
That spread jumped from $28.55 on February 27 to $44.33 on March 5. It hasn’t yet reached the $60 peak of the Russia-Ukraine crisis in May 2022, but the spike is still a major windfall. Refiners are charging gas stations significantly more than their own costs have risen.
A crisis like this is a great time to be a refiner. Amid uncertainty, refiners can cut their output, which drives commodity prices even higher. That ability to restrict supply to raise prices is the textbook definition of market power—and the refining industry is concentrated enough to use it, particularly in California.
According to the same DPMO report, in 2025, after Phillips 66, the energy company, closed its Los Angeles refinery, the top four firms—Chevron, Marathon, PBF Energy, and Valero—controlled 98 percent of California’s in-state refining capacity. The DPMO found that “Refiners with substantial market share may lack incentives to fully resupply the market during outages and maintain adequate inventories throughout the year.” By contrast, it concluded, “in a more competitive market, market participants would position themselves to quickly capitalize on higher prices by increasing supply, which would drive down market prices.” Philip Verleger, a veteran energy market analyst, describes “hoarding” by major refiners—namely, minimizing sales to retain crude inventories, only to sell them at higher prices during a crisis.
Making gas affordable again
If the problem is concentration, the long-term fix is structural: break up the refining industry. Force the largest companies to divest some capacity and let competition do its work. Concentration is a problem outside of California as well: Since 1985, when the U.S. had 199 refineries, consolidation has reduced their number by 34 percent, leaving just 132 in 2025.
Another lever to increase competition, suggested by the IMF, could be the imposition of excess profit taxes, which could generate fiscal revenue without driving inflation or distorting the level or allocation of investment. (So-called windfall profit taxes are also considered more efficient than other profit taxes.) The United Kingdom already put in place a version of a windfall tax in May 2022, responding to fossil fuel companies’ bumper years from 2020 onwards. The U.S. government could also use the tax to issue rebates for low-income consumers.
Finally, a solution to curbing price spikes in the short run is to impose and enforce laws against price gouging. During her presidential campaign, Kamala Harris proposed—and, amidst neoliberal scorn, quickly abandoned—a federal law to ban price gouging during crises. It’s time to revisit that idea. In the interim, states with anti-price-gouging laws should crack down on refiners. Under New York law, a price-gouging violation occurs when prices jump by more than 10 percent during an abnormal disruption of the market. (Needless to say, war or military actions can cause such a disruption.) That provision was added after price spikes during the first Gulf War. It also applies to every party in the supply chain, including refiners, so long as the sale is in New York.
Given Trump’s connections with, and dependence on, the oil-and-gas industry, it is unlikely he would take any of these steps. But Democrats should put these ideas before voters as a stark contrast to the current pro-monopoly administration.
