The U.S. national average gasoline price is on track to top $4 a gallon for the first time ever on Labor Day, as war-driven disruptions to Middle East and Russian energy supply push crude and refined-fuel prices higher. Refinery runs sit at the highest level since 2018 and gasoline stockpiles have fallen below their five-year average, leaving little room to cool prices before the holiday.
Americans are facing record Labor Day weekend gasoline prices, with the war in the Middle East still pushing energy costs higher just as midterm campaign season gets underway. The national average price will likely reach $4.03 a gallon on Labor Day, according to GasBuddy analyst Patrick De Haan — above the previous record of $3.83 a gallon set in 2012.
The average stood at around $4.13 a gallon on Thursday, up nearly a dollar from a year earlier, GasBuddy said. Analysts consider $4 a gallon a pain point for many consumers, and the issue has become a persistent concern for President Trump and his Republican Party.
Crude and refined fuels climb together
Pump prices have tracked crude oil, which jumped back over $90 a barrel this week after renewed U.S.-Iran military action revived fears of supply disruptions. Distillate prices, including diesel and heating oil, also rose, driven partly by attacks on Russian refining facilities.
Retail fuel prices and crude oil typically move in the same direction, since crude feedstock is the dominant cost of producing fuel.
Drivers feel the pinch
According to Reuters: "It's completely out of control," Randi O'Brien said while filling up her truck at a Phillips 66 near Evergreen, Colorado. Colorado, along with Utah, Idaho, Montana, Wyoming, and North Dakota, has recorded some of the steepest price gains since the war started, while California, Hawaii, and Washington currently have the nation's highest average prices.
O'Brien blamed part of the run-up on rising crude and fuel exports since the Iran war began, as other countries turn to the U.S. for supply. Refined product exports are up more than 10% compared with last year, according to the U.S. Energy Information Administration. In Houston, resident Madison Moore said she is scaling back her own Labor Day travel plans as household budgets tighten.
Little room to add supply
The price surge is primarily a supply story, said Kuan Dosmuratov, a research analyst at Wood Mackenzie. Concerns about disruptions to shipments through the Strait of Hormuz have lifted both crude prices and refining margins, while attacks on Russian refineries have tightened fuel inventories.
U.S. refinery utilization stands at 98%, the highest level since 2018, and Washington has already extended the Jones Act waiver and ended summer-blend gasoline requirements early to try to cap prices. Still, gasoline inventories fell by 1.2 million barrels last week to 205.7 million barrels, below the five-year August average of 217.6 million barrels, the EIA said.
Diesel prices hit a new record this week. Labor Day air travelers are expected to pay 20% more for tickets than a year earlier, according to AAA. Tom Kloza, chief energy adviser at Gulf Oil, said there is a better-than-even chance retail diesel prices will surpass the all-time record of about $5.82 a gallon set in June 2022.
Sources: US Top News and Analysis, Commodities & Futures News
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