Oil shock could erase gains from bigger tax refunds, economists warn

Stanford economists warn that higher oil and gasoline costs could largely offset the extra tax refunds Americans are set to receive this year. In a scenario where crude prices spike (with disruption to the Strait of Hormuz) but retreat later, U.S. households could spend about $740 more on gas this year, roughly canceling out the projected $360–$748 in additional refunds from last year’s tax changes. The result is a net drag on spending growth and inflation, with big variation by household — non-drivers and EV owners face less pain while long commuters face higher costs — making the outlook uncertain and tempering the hoped-for fiscal tailwind.