What's Happening
Economist and Euro Pacific Capital CEO Peter Schiff issued a stark warning in late September 2026, telling Fox Business that he believes the current economic downturn is far from finished — and that oil prices are likely to climb higher despite, or perhaps because of, the broader economic stress. 'I don't think it's over,' Schiff said, a phrase that carries particular weight given his track record of forecasting the 2008 financial crisis before it unfolded.
Schiff's thesis runs counter to the conventional wisdom that recessions suppress energy demand and therefore push oil and gas prices lower. Instead, he argues that the structural forces now driving crude oil higher — dollar weakness, persistent inflation, constrained global supply, and OPEC+ discipline — are powerful enough to overwhelm any demand destruction that a slowing US economy might produce. In his view, the US could face a stagflationary environment: slowing growth paired with stubbornly high commodity prices, including oil.
This warning lands at a moment when the national average gas price today is already elevated relative to historical norms for late September. Drivers filling up in the final week of September 2026 are navigating a market shaped by tight crude supply, refinery margin pressures, and geopolitical uncertainty across multiple oil-producing regions. Schiff's comments add a longer-term dimension to what many consumers had hoped would be a temporary price spike, suggesting the pain at the pump may persist well into 2027. For fleet operators, small businesses, and everyday commuters, the implications of a prolonged high-price environment are significant and demand serious attention.
Data Snapshot
As of the week ending September 26, 2026, the AAA national average gas price sits near $3.85 per gallon for regular unleaded, reflecting a market that has remained stubbornly above the $3.50 threshold for most of the year. WTI crude oil, the US benchmark, has been trading in the $88–$92 per barrel range in recent sessions, according to EIA spot price data — a level that historically translates to retail gasoline prices in the $3.70–$4.10 range depending on regional refining costs and state taxes.
EIA's most recent Weekly Petroleum Status Report showed a draw of approximately 3.2 million barrels from US commercial crude inventories, tightening domestic supply and providing upward price support. US refinery utilization has been running near 91–92% of operable capacity, leaving limited slack to absorb additional demand surges. Brent crude, the international benchmark, has been trading at a roughly $3–$4 premium to WTI, reflecting global supply tightness that Schiff and other commodity bulls point to as a structural, not cyclical, phenomenon.
Why It Matters at the Pump
The relationship between crude oil prices and what drivers pay per gallon is direct but not instantaneous. As a general rule of thumb, a $10-per-barrel move in crude oil translates to roughly 24 cents per gallon at the retail level, though the pass-through can take one to three weeks to fully materialize. If Schiff's forecast of higher oil prices proves correct and WTI moves from the current $88–$92 range toward $100 per barrel or beyond, drivers could be looking at a national average price per gallon approaching $4.25–$4.50 — levels not seen consistently since the summer of 2022.
The regional picture is uneven, as always. California drivers are already paying well above the national average, with prices in Los Angeles and the Bay Area frequently exceeding $4.80–$5.10 per gallon due to the state's unique fuel blend requirements, higher state excise taxes, and limited pipeline connectivity to cheaper inland crude supplies. The West Coast broadly tends to lead price movements in both directions.
Midwest drivers, particularly in states like Illinois, Michigan, and Ohio, benefit from proximity to refining infrastructure in the PADD 2 region but are exposed to periodic price spikes when regional refineries undergo maintenance or unplanned outages. Gulf Coast states — Texas, Louisiana, Mississippi — typically see the lowest prices nationally given their proximity to refining capacity, but even those markets have seen prices creep upward in 2026. The Northeast, dependent on imports and aging refinery infrastructure, remains vulnerable to supply disruptions that can send prices sharply higher with little warning.
What's Driving This
Schiff's warning doesn't exist in a vacuum — it reflects a confluence of real, measurable supply-side pressures that have been building throughout 2026. OPEC+, the alliance of major oil-producing nations led by Saudi Arabia and Russia, has maintained production cuts of approximately 3.66 million barrels per day relative to its baseline quotas, a level of discipline that has kept global crude markets tighter than many analysts anticipated at the start of the year. Saudi Arabia in particular has extended its voluntary cut of 1 million barrels per day multiple times, signaling a clear preference for price stability above $85 per barrel.
Geopolitical risk remains elevated across key producing regions. Ongoing instability in the Middle East, sanctions pressure on Russian and Iranian crude exports, and infrastructure vulnerabilities in West Africa have all contributed to a risk premium embedded in crude prices. The IEA has noted that global spare production capacity — the buffer that markets rely on to absorb shocks — remains historically thin.
On the demand side, China's economic trajectory continues to be a wildcard. While Chinese demand growth has moderated from the post-COVID surge, it remains a significant driver of global oil consumption. Any stimulus measures from Beijing that accelerate industrial activity could tighten markets further. Meanwhile, US gasoline demand, according to EIA data, has been running near seasonal norms, providing no relief from the demand side of the equation.
Dollar weakness, a central pillar of Schiff's broader economic thesis, also plays a direct role. Because crude oil is priced globally in US dollars, a weaker dollar makes oil cheaper for foreign buyers, stimulating demand while simultaneously reducing the purchasing power of American consumers at the pump.
Historical Context
To understand whether Schiff's warning represents a genuine inflection point or routine market noise, it helps to place current prices in historical context. The national average gas price peaked at $5.02 per gallon in June 2022, the highest level ever recorded in nominal terms, driven by the post-pandemic demand surge and the supply shock triggered by Russia's invasion of Ukraine. Prices then fell sharply through late 2022 and into early 2023, bottoming near $3.10–$3.20 per gallon as recession fears dampened demand and OPEC+ struggled to maintain cohesion.
The $3.85 average seen in late September 2026 sits roughly in the middle of that range — elevated compared to the 2023 lows but still well below the 2022 peak. However, the trajectory matters as much as the absolute level. Prices have been grinding higher through much of 2026, and Schiff's stagflation scenario, if it materializes, would represent a departure from the historical pattern in which recessions reliably bring gasoline prices down.
For context, during the stagflationary period of the late 1970s and early 1980s, oil prices rose sharply even as the US economy contracted — a precedent Schiff frequently cites in his analysis. Adjusted for inflation, the 1980 oil price peak would be equivalent to roughly $130–$140 per barrel in today's dollars, suggesting there is theoretical room for further increases even from current elevated levels.
Regional Breakdown
California continues to lead the nation in pump prices, with the statewide average hovering near $4.90–$5.05 per gallon as of late September 2026, according to AAA data. The state's CARB-compliant fuel requirements, combined with limited refinery capacity following the closure of several facilities in recent years, make California prices structurally higher and more volatile than the rest of the country.
The Pacific Northwest — Washington and Oregon — typically tracks California closely, with averages in the $4.40–$4.70 range. Nevada, despite its proximity to California, benefits from less restrictive fuel standards and tends to run $0.20–$0.40 below California averages.
In the Midwest, Illinois remains an outlier due to high state and local taxes, with Chicago-area prices frequently $0.40–$0.60 above the national average. Indiana and Missouri, by contrast, are among the more affordable Midwestern markets. Texas and Oklahoma, anchored by Gulf Coast refining infrastructure, remain among the cheapest states in the nation, with averages near $3.20–$3.40 per gallon. Florida, a major tourism market with high demand, sits near the national average. New York and Connecticut in the Northeast carry high tax burdens that keep prices above $3.90–$4.10 per gallon.
What Experts Are Saying
Schiff is not alone in his cautious outlook, though his conclusions are more dramatic than mainstream forecasts. The EIA's Short-Term Energy Outlook, published monthly, has projected that WTI crude will average in the high $80s to low $90s per barrel through the end of 2026, with retail gasoline prices remaining above $3.60 nationally. The agency has flagged OPEC+ supply discipline and geopolitical risk as the primary upside risks to that forecast.
Goldman Sachs commodity analysts have maintained a constructive view on oil prices, citing structural underinvestment in upstream production capacity over the past decade as a factor that will keep supply constrained even if demand moderates. AAA has noted that late September and October typically bring some seasonal relief as summer driving demand fades and refineries switch to cheaper winter-blend fuel formulations — a transition that could provide a modest 10–20 cent per gallon tailwind for consumers in the near term.
GasBuddy's head of petroleum analysis has pointed to the inventory draw trend as a key indicator to watch: consecutive weeks of crude draws without a corresponding build in gasoline inventories would signal continued upward price pressure heading into the fourth quarter.
What Drivers Should Expect
In the near term — the next two to four weeks — drivers may actually catch a small break. The annual transition from summer-blend to winter-blend gasoline, which typically occurs in mid-to-late September and runs through October, reduces refinery production costs and historically delivers a 5–15 cent per gallon decline at the pump. This seasonal effect could temporarily offset some of the upward pressure from crude oil markets.
Beyond that window, however, the outlook is less certain. If Schiff's stagflation scenario gains traction and crude oil pushes toward $95–$100 per barrel, the seasonal blend savings would be more than erased. Drivers should treat any near-term price dip as an opportunity rather than a trend reversal.
Practical steps for cost-conscious drivers: Use GasBuddy or the AAA TripTik app to identify the cheapest stations within a reasonable driving radius — price differentials of $0.20–$0.40 per gallon within a single metro area are common. Wholesale club stations (Costco, Sam's Club, BJ's) consistently undercut street prices by $0.10–$0.25 per gallon. If your vehicle is flex-fuel capable, check E85 prices, which have been running significantly below regular unleaded in many Midwest markets. For fleet operators, locking in fuel contracts or hedging through futures may be worth exploring if the high-price environment persists into 2027 as Schiff suggests it might.