Many Americans are feeling the pinch as prices at the pump spiked due to escalating conflicts with Iran. As consumer sentiment dampens, policymakers are eager to take action to help. However, it’s important to get the facts straight on how gas prices at the pump are set and what causes price shocks before ushering in subsidies and policies that only pad industry profits instead of truly offering relief for consumers.

Public policy changes can shape markets in the long-term, but the price of gas is determined by the balance of global supply and demand, even more so than most products we buy. In fact, the federal government has few options to affect gas prices, especially in the short term, that would not threaten the foundation of our market-driven economy and create more costs and liabilities for taxpayers and consumers down the road.