Why Gasoline Costs More in 2026: Refinery Closures, Global Supply and Household Budgets

THE PRICE AT THE PUMP (October 26, 2026). EIA's weekly survey puts U.S. regular gasoline at $4.269 per gallon, Houston at $3.681, and Texas at $3.632. These are weekly area averages, not a quote for every station. The national average was $4.284 one week earlier; Houston was $3.710.

WHAT CLOSED? EIA reports 18.2 million barrels per calendar day of U.S. operable refining capacity on January 1, 2026, a decline of more than 250,000 barrels per day (about 1%) from January 2025. LyondellBasell's Houston refinery stopped refining in March 2025 and Phillips 66's Los Angeles refinery stopped in October 2025. Together those sites represented about 400,000 barrels per day of capacity, partly offset by expansions elsewhere.

WHY LOCATION MATTERS. EIA estimates the Los Angeles closure cut West Coast refining capacity by about 5%, while the larger Houston closure represented about 3% of Gulf Coast capacity. The Gulf Coast produces more fuel than it consumes. Limited product-pipeline links between the Gulf Coast and West Coast mean a regional closure can matter more locally than the national percentage suggests. EIA also reports Valero's Benicia refinery ceased refining operations and was removed from monthly capacity estimates in March 2026.

ARE REFINERIES SITTING IDLE? No, not generally. EIA reports U.S. refinery utilization averaged more than 95% between May and September 2026, the highest rate for those months since 1998. Output nevertheless was only the highest since 2019, because nationwide capacity had fallen about 4% since then. High utilization and shrinking capacity can occur at the same time.

WHAT ELSE IS DRIVING PRICES? EIA's September 2026 analysis identified disruptions to global refining activity in Russia, China and the Middle East, tight global gasoline supplies and elevated crack spreads (a measure of the difference between crude and refined-product prices). Since May 2026, the New York Harbor gasoline crack spread averaged roughly $1 per gallon above its 2025 level. A crack spread is an indicator, not a refiner's net profit or a direct one-for-one breakdown of retail prices.

WHY GLOBAL EVENTS AFFECT U.S. PUMPS. Petroleum products trade across borders. EIA reports gasoline imports since March were 32% below their 2021-2025 five-year average at the time of its September analysis. Disruptions can raise import costs and demand for U.S. exports even while American refineries operate near capacity. Crude oil costs, refining margins, transportation, distribution, retail costs and taxes all affect pump prices.

WHAT DOES THIS MEAN FOR A DRIVER? At 60 gallons of gasoline per month, the October 26 U.S. average implies about $256 monthly and Houston about $221, a difference of roughly $35. This is an illustrative quantity, not an average household's actual fuel consumption. Compared with $3 per gallon, 60 gallons at $4.269 would cost about $76 more per month.

HOW FUEL FITS INTO THE AFFORDABILITY QUESTION. A Houston-area independent-living budget of $65,000 in gross annual earnings equates to $31.25 per hour at 2,080 work hours. That $65,000 figure is a household budgeting scenario, not a government-established minimum or universal requirement. Actual needs vary with rent, household size, debt, health insurance, transportation, taxes and benefits.

COMPARE THAT SCENARIO WITH LOCAL WAGES. The Bureau of Labor Statistics reports May 2025 Houston-area mean hourly pay of $23.66 for office and administrative support, $24.26 for transportation and material moving, $25.52 for production, and $27.41 for construction and extraction. Annualized at 2,080 hours, these are about $49,213, $50,461, $53,082 and $57,013 before taxes, respectively. These are occupational-group means, not median pay or guaranteed full-time annual earnings.

DO NOT CONFUSE HOUSEHOLD AND INDIVIDUAL INCOME. The Census Bureau reports 2025 median U.S. household income of $87,460. A household can include multiple earners, so that figure cannot be compared directly with a single worker's wage or with an individual-living budget without acknowledging the difference.

WHAT THE EVIDENCE SUPPORTS. U.S. refinery closures have tightened capacity, particularly in some regions. High 2026 utilization indicates operating refineries were not broadly withholding production. International supply disruptions and refining margins are also material contributors. The evidence does not support assigning all gasoline price changes to one president, regulation, company or refinery closure without a more specific causal analysis. Figures reflect sources available October 28, 2026.