President Donald Trump has directed the Department of Justice (DOJ) to investigate major oil companies for failing to reduce gasoline prices in line with declining crude oil costs. Economist Peter Schiff criticized the move on social media platform X, calling it a socialist action similar to policies Trump previously attacked. Schiff noted that Trump had accused former Vice President Kamala Harris of advocating socialism when she proposed banning price gouging on food items during the 2024 Presidential Election campaign. Harris's campaign had stated that such rules would prevent big corporations from unfairly exploiting consumers during crises.

Trump accused oil firms of overcharging customers by not adjusting pump prices despite paying significantly less for oil, stating on Truth Social, "Gasoline prices better start going down a lot faster than what I’m seeing!" The President argued that the sharp drop in crude costs should result in immediate relief at the pump, alleging that customers are being gouged. The directive follows a recent Memorandum of Understanding (MoU) with Iran, which Trump credited for a record-breaking oil flow through the Strait of Hormuz and a subsequent decrease in oil prices.

Economic Perspectives on Price Lag

Nobel laureate economist Paul Krugman argued that the current price lag is a result of a well-documented market pattern rather than corporate malfeasance. Krugman described the phenomenon where fuel markets respond asymmetrically to international shocks. "When there is a global shock that causes the price of crude oil to soar, gasoline prices rise like a rocket," Krugman wrote. "But when the crisis is over and crude prices plunge, the price of gas declines only gradually — it drifts down like feathers."

Chevron Corp Chief Financial Officer Eimear Bonner addressed the pricing concerns, stating that the company expects prices to "come down as things continue to normalize" in the Middle East. Bonner did not provide a specific timeline for the adjustment.

Current Market Data

The national average for regular gasoline was at $3.9180 per gallon on Thursday, according to American Automobile Association (AAA) data. While this figure represents a decrease from $4.515 a month ago, it remains significantly above last year’s $3.224 average. Prices remained above $5 per gallon in Pacific states, with California gas costing $5.5080 per gallon. Global oil benchmarks showed declines, with Brent crude trading 1.52% lower at $75.63 per barrel and WTI crude futures down 1.67% at $71.99 per barrel.

GasBuddy analyst Patrick De Haan indicated that concerns over the Strait of Hormuz could slow the pace of the price drop. He highlighted that the U.S. Strategic Petroleum Reserve (SPR) is set to hit a 43-year low based on upcoming Department of Energy (DOE) data. The reserve stands at approximately 47% of its 714 million barrel total capacity as of late June 2026. De Haan noted practical limits on extraction, estimating 150-170 million barrels as unrecoverable "heel" oil, with operational floors cited around 243 million barrels for emergency needs.

Oil futures fell below $70 a barrel on Wednesday as diplomatic progress toward ending the 2026 U.S.-Iran conflict reduced the geopolitical risk premium that had driven prices higher. The decline reverses earlier spikes that had pushed crude well above $100 at the height of the crisis. Benchmark prices first fell below $81 before slipping under $70, supported by agreements to reopen the Strait of Hormuz. At the time of publication, WTI crude futures were down about 1.35% near $69.39 a barrel, while Brent crude futures fell approximately 1.67% to $72.52.

The drop in crude prices is raising questions about whether the sector's strong run can continue. Traditionally, falling oil prices weigh on energy producers by reducing revenue and profit expectations. However, energy stocks have shown surprising resilience, supported by disciplined capital spending and shareholder returns. For ETF investors, the key question is whether energy equities can continue outperforming if crude prices stay below the psychologically important $70 threshold.

Energy ETF Performance

The largest energy-focused fund, the Energy Select Sector SPDR Fund (NYSE: XLE), provides exposure to integrated oil giants such as Exxon Mobil Corp (NYSE: XOM) and Chevron Corp (NYSE: CVX). While these companies have diversified operations, prolonged weakness in crude prices could pressure earnings expectations. The fund has been down 9% in the past month.

Funds focused on exploration and production companies may be more vulnerable. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP) holds independent oil producers whose profitability is more directly tied to commodity prices. This fund has been down more than 10% in the past month. Oil-services companies tracked by the VanEck Oil Services ETF (NYSE: OIH) have declined more than 14% in the past month, as lower oil prices can lead producers to trim spending plans.

Sector Resilience

Unlike previous downturns, many energy companies have prioritized profitability over production growth. Producers have focused on generating free cash flow, repurchasing shares and maintaining dividends. This shift has helped attract investors seeking value and income. Additionally, if lower gasoline prices boost consumer spending and support broader economic growth, energy demand may remain stronger than investors expect. Upcoming earnings reports will be critical for investors assessing if producers can sustain cash generation in a sub-$70 oil environment.