When lawmakers propose solutions to complex economic problems, the first requirement should be a clear understanding of how those problems actually work.

A recent Facebook post by US Senator Bernie Sanders compared current oil and gasoline prices with levels seen in 2011, arguing that oil companies are “gouging” consumers.

The logic behind the claim is simple: if crude oil prices are similar, gasoline prices should also be similar. And if they are not, then someone must be making unfair profits at the expense of consumers.

That argument may sound intuitive, but it ignores key parts of the picture.

While gasoline prices are strongly linked to crude oil prices, there are many reasons why the two can diverge. Gasoline is a refined product that sits at the end of a long, complex, and often highly stressed supply chain. Focusing only on the price of crude oil overlooks the physical realities that ultimately determine what consumers pay at the pump.

From Crude Oil to Gasoline: A System Under Pressure

The price of crude oil is only the starting point. Between oil wells and gas stations lies a vast network of refineries, pipelines, storage terminals, and transportation systems.

When that system operates smoothly, the relationship between crude oil and gasoline prices remains relatively stable. But when the system comes under stress, the gap between the two can widen significantly.

That is exactly what is happening today.

The Refining Crisis Many Ignore

One of the biggest differences between 2011 and today is refining capacity.

Over the past decade, the United States and parts of Europe have lost significant refining capacity as some refineries shut down, others were converted to renewable fuel production, and investment in the sector weakened. At the same time, demand rebounded sharply after the COVID-19 pandemic.

The result is a system operating with extremely thin spare capacity. Refinery utilization rates are often running above 90%, levels where even small disruptions can have outsized effects.

This is where the “crack spread” comes into play — the profit margin refiners earn from turning crude oil into gasoline and diesel.

When refining capacity becomes constrained, these margins expand, pushing gasoline prices higher even if crude oil prices remain relatively stable.

In other words, there may be plenty of crude oil available, but fuel prices remain elevated because the real bottleneck is not oil supply itself, but the ability to process and refine it.

Wars Do Not Just Raise Prices — They Disrupt Systems

The current geopolitical environment adds another layer of complexity.

Conflicts in key regions, including tensions surrounding the Strait of Hormuz, do not only increase oil prices. They also disrupt logistics.

Shipping routes are altered, insurance costs rise, delivery times increase, and supply chains become less efficient.

Refineries are also highly specialized and designed to process specific grades of crude oil. When geopolitical disruptions force changes in supply sources, refineries may need to use less suitable crude blends, reducing the amount of gasoline produced from each barrel of oil.

This dynamic was also seen after Russia’s invasion of Ukraine, which triggered sharp spikes in diesel and gasoline prices.

These mechanical and physical constraints effectively act as a hidden tax on the system, increasing the cost of producing and transporting fuel even if crude oil prices appear stable in headlines.

The Phenomenon Is Not New — It Is Often Misunderstood

The divergence between crude oil and gasoline prices is not new.

For example, after Hurricane Katrina in 2005, crude oil prices actually declined because damaged refineries could not process available supplies. At the same time, gasoline prices surged due to shortages of refined fuel.

The lesson is simple: the energy system functions as an interconnected chain. If one part breaks down or comes under pressure, the entire system adjusts through prices.

What we are seeing today reflects a similar dynamic, driven not by a natural disaster, but by geopolitical disruptions and structural changes in refining capacity.

Profits Are a Result, Not the Cause

It is true that energy companies are generating strong profits. But those profits are largely a result of higher prices, not necessarily the root cause behind them.

When supplies are constrained and demand remains strong, prices rise. And when prices rise, profits naturally follow.

That distinction matters greatly. If high prices were simply the result of companies arbitrarily charging more, the solution would be straightforward. But when prices are driven by physical constraints, logistical frictions, and global market dynamics, the issue becomes far more complicated.

The Risk of Misdiagnosing the Problem

Policies such as windfall profit taxes are often proposed as solutions to high energy prices. But if the diagnosis is wrong, the cure can worsen the problem.

Discouraging investment in refining and midstream infrastructure does not reduce prices. It tightens capacity further and increases the risk of future price spikes.

If the goal is to reduce fuel costs, the focus should instead be on improving system capacity, reducing bottlenecks, and stabilizing supply chains.

The Bottom Line

Comparing oil prices across different periods without accounting for the broader system leads to misleading conclusions.

Gasoline prices are not determined solely by the cost of crude oil. They are also shaped by refining capacity, logistics, geopolitics, and infrastructure constraints.

If policymakers want to address high fuel prices effectively, they must first begin with a clear understanding of those realities.

Because correctly diagnosing the problem — whether in energy markets or the broader economy — is the first step toward finding the right solution.

Major Wall Street indexes paused their advance on Monday following last week’s record-breaking rally, as renewed concerns over stalled negotiations between the United States and Iran pressured investor risk appetite.

US President Donald Trump’s swift rejection of Iran’s response to a US peace proposal fueled fears that the 10-week conflict could drag on and keep shipping through the Strait of Hormuz heavily disrupted, sending crude oil prices up around 3%.

Even so, higher oil prices have failed in recent weeks to derail the broader market momentum. Both the S&P 500 and Nasdaq closed at record highs on Friday, supported by strong corporate earnings, optimism surrounding semiconductor companies, and a robust monthly jobs report that highlighted the resilience of the US economy.

The S&P 500 and Nasdaq also touched fresh record highs again on Monday, extending gains from the previous session.

However, that resilience may soon face a test as earnings season begins to wind down and investor focus shifts toward Tuesday’s consumer price index report, which is expected to show higher inflation in April amid mounting pressure from Middle East energy prices.

Producer price data and monthly retail sales figures are also due later this week.

Robert Edwards, chief investment officer at Edwards Asset Management, said:

“The list of concerns is long, but the economy continues proving the pessimists wrong.

Big tech companies have reclaimed leadership, supported by strong and growing revenues and earnings. These companies are at the center of every major structural trend.”

By 10:08 a.m. Eastern Time, the Dow Jones Industrial Average slipped 3.54 points, or 0.01%, to 49,605.62, while the S&P 500 rose 11.38 points, or 0.15%, to 7,410.31, and the Nasdaq Composite gained 10.19 points, or 0.04%, to 26,257.27.

Eight of the 11 major S&P 500 sectors traded higher, led by the energy sector with gains of 1.5%.

The materials sector also climbed 1.3%, tracking gains in precious metals prices.

Investors are also watching an upcoming meeting between Trump and Chinese President Xi Jinping later this week, where the two leaders are expected to discuss Iran, Taiwan, artificial intelligence, nuclear weapons, and a possible extension of the critical minerals agreement.

Earnings season is also expected to gradually slow after a strong performance led by the technology sector.

Among the key companies reporting this week are networking giant Cisco Systems and semiconductor equipment maker Applied Materials, while Nvidia and Walmart are scheduled to release results later this month.

Intel shares rose 3.5% on Monday following a 14% surge on Friday after reports of a preliminary chip manufacturing agreement with Apple, while rival Qualcomm jumped 8.6% to a record high.

Meanwhile, Mosaic shares fell 2.1% after the fertilizer company withdrew its annual phosphate production guidance.

Fox Corp shares gained 4% after the media company topped Wall Street estimates for third-quarter revenue.

Elsewhere, several airline stocks declined as higher oil prices threatened profit margins, with Southwest Airlines, Delta Air Lines, Alaska Air, and United Airlines falling between 1.8% and 2%.

Advancing stocks outnumbered decliners by a ratio of 1.05-to-1 on the NYSE and 1.01-to-1 on the Nasdaq.

The S&P 500 posted 27 new 52-week highs against 30 new lows, while the Nasdaq Composite recorded 115 new highs and 91 new lows.

Copper prices climbed during Monday trading to their highest levels in more than three months, as growing supply shortage concerns outweighed demand fears amid the ongoing stalemate surrounding the Iranian war.

Benchmark three-month copper on the London Metal Exchange rose 1.3% to $13,573 per metric ton by 10:30 GMT, marking its strongest level since January 29.

The industrial metal is now on track for a sixth consecutive session of gains, its longest winning streak since December.

Copper has gained around 10% since the start of the year, supported by concerns over supply disruptions and falling production at several major mines worldwide.

Despite the strong rally, copper prices remain below the record highs the metal reached in January.

Bitcoin opened trading on Monday at $82,164.43, marking its strongest opening price since January 31. By 7:16 a.m. Eastern Time, Bitcoin had slipped to $80,971.89.

Ethereum opened trading at $2,369.40, its highest opening level since April 27. Ethereum later eased to $2,331.11 during morning trading by 7:16 a.m. Eastern Time.

Global markets continue to digest the latest developments in the Middle East after US President Donald Trump firmly rejected Iran’s response to the American peace proposal, describing it in a post on Truth Social as “totally unacceptable.”

Monday morning saw gold prices decline, while oil prices rose, US stock futures stabilized, and US Treasury yields moved higher. As for the world’s two largest cryptocurrencies, Bitcoin continues to hover near the $82,000 level but is struggling to maintain stability above it for extended periods, while Ethereum continues to show resilience near the $2,300 mark.

Bitcoin traded 1.9% higher on Monday morning compared to Sunday’s opening. Its opening price also rose 4.6% compared to last week and 12.6% from a month ago, though it remains down 21.5% compared to the same period last year.

Bitcoin reached its all-time high of $126,198.07 on October 6, 2025, while its all-time low stood at $0.04865 on July 14, 2010.

Meanwhile, Ethereum rose 1.8% on Monday morning compared to Sunday’s opening. Its opening price increased 2% from last week and 5.5% from last month, while remaining down 8.3% year-on-year.

Ethereum’s all-time high reached $4,953.73 on August 24, 2025, while its all-time low was recorded at $0.4209 on October 21, 2015.

Bitcoin is a type of cryptocurrency that exists only in digital form and operates without direct government or banking oversight. Unlike traditional currencies such as the US dollar, euro, or Canadian dollar, Bitcoin has no physical version and is issued independently of governments.

Bitcoin relies on a public digital ledger known as the blockchain, which records transactions and verifies ownership. The system is decentralized and distributed across a global network of servers.

Decentralization is considered one of the core features of cryptocurrencies, allowing direct transactions between users without the need for banking intermediaries, while also offering greater security and reducing manipulation risks.

In 2026, Bitcoin can be purchased through several channels, including cryptocurrency exchanges, fintech applications, and traditional brokerage firms offering access to Bitcoin-linked exchange-traded funds.

Experts advise investors to determine before buying whether they want to directly own the cryptocurrency and its private keys, or simply gain price exposure through regulated and more accessible investment products.

Despite growing institutional interest in digital assets, Bitcoin is still considered a highly risky and volatile asset compared to many other investment classes, with prices capable of experiencing sharp swings over short periods and without warning.