Here’s a fun thought experiment that’s less fun than it sounds: What if the government’s big tax giveaway this year gets completely wiped out by gas prices? Not by inflation, not by bad luck, but by geopolitics and crude oil doing what crude oil does best—spiking at the worst possible time.
That’s the bear-case scenario Tavis McCourt, an equity strategist at Raymond James, is floating around. And honestly? It’s worth paying attention to, even if it’s not his baseline prediction.
The setup is simple. Oil prices have been on a tear thanks to the US-Iran war, and if they stay elevated—specifically, if crude holds a $20-per-barrel increase for a full year—Americans could end up paying an extra $150 billion annually at the pump. That’s not chump change. That’s literally the same amount of tax savings Trump’s “One Big Beautiful Bill” is supposed to deliver this year. So you get a tax cut in one hand and a gas price hike in the other, and they cancel each other out. Neat.
Here’s the math: Americans typically spend about $400 billion a year on gasoline. A $20 jump per barrel (which is roughly a 38% increase from pre-war levels) would push that to $550 billion. That’s a $150 billion swing. McCourt pulled these numbers from actual spending data, so it’s not just vibes—it’s grounded in how much Americans actually drive and how much they actually pay.
The good news? This scenario is probably not going to happen. McCourt himself said it’s a bear case, not his baseline. And there’s historical precedent for why. Oil price shocks tend to be short-lived. The spike after the first Iraq War in the 1990s? Didn’t last. The surge when Russia invaded Ukraine in 2022? Also temporary. Oil markets eventually cool off because supply chains adjust, demand shifts, and the world finds workarounds.
Plus, oil prices are already coming down. Brent crude was flirting with $120 a barrel just days ago. By Tuesday, it had dropped to $87. That’s still up from pre-war levels, but it’s nowhere near the sustained spike McCourt’s bear case requires. Trump even suggested the war might be winding down, which sent prices lower.
So what’s the real takeaway? McCourt’s honest about it: “I wouldn’t believe anybody who had a forecast. I think we’re into the unknown at this point.” Translation: Nobody actually knows what happens next with oil, the war, or the economy. We’re all just making educated guesses.
The broader point is worth noting though. Tax cuts are great until they’re not—and they’re definitely not if they get offset by commodity shocks you can’t control. It’s a reminder that fiscal stimulus only goes so far when geopolitical risk is in the driver’s seat. Your refund might feel real, but so will those gas prices.