Americans are heading into the Labor Day weekend facing unusually high gasoline prices as the war in the Middle East continues to push up energy costs.
The national average could reach $4.03 per gallon on Labor Day, according to GasBuddy analyst Patrick De Haan. That would exceed the previous Labor Day record of $3.83 set in 2012.
De Haan said gasoline prices have reached their highest level this late in the year. He warned that the national average could cross $4 per gallon on Labor Day for the first time.
GasBuddy data showed the national average at about $4.13 per gallon on Thursday. That was nearly $1 higher than the average recorded a year earlier.
Gas prices become political issue
The $4 mark has become a major concern for American drivers. Gasoline prices are also one of the most visible measures of the economy for consumers.
With pump prices remaining above $4 for much of the year, the issue has created political pressure for President Donald Trump and Republicans ahead of the midterm elections.
Trump has repeatedly promised to reduce energy costs. He has recently criticized refiners and fuel retailers over elevated prices.
On August 14, Trump said Americans should accept paying a “tiny little bit more” for gasoline if it helped prevent Iran from obtaining a nuclear weapon.
The timing is particularly important because Labor Day often marks the final major summer travel weekend. Millions of Americans typically drive or fly for vacations and family trips.
Middle East conflict pushes oil higher
Gasoline prices have risen alongside crude oil prices.
Crude prices climbed above $90 a barrel this week after renewed military action involving the United States and Iran increased concerns about disruptions to global oil supplies.
The Strait of Hormuz remains a major source of concern for energy markets. Any serious disruption in the waterway could affect global crude and fuel shipments.
Diesel and heating oil prices have also increased. Attacks on Russian refining facilities have added to concerns about fuel supplies.
Crude oil represents the largest cost involved in producing gasoline. As a result, pump prices generally move in the same direction as crude prices.
Drivers cut back on travel
Higher fuel costs are already changing travel plans for some Americans.
Randi O’Brien, 57, said she could afford only $15 worth of gasoline when she stopped at a Phillips 66 station near Evergreen, Colorado.
O’Brien drives about 40 minutes round trip to work at Home Depot. She said the rising cost of fuel has made it harder to manage her household budget.
Several Western states, including Colorado, Utah, Idaho, Montana, Wyoming and North Dakota, have recorded some of the sharpest price increases since the conflict began.
California, Hawaii and Washington currently have the highest average gasoline prices in the country.
Houston resident Madison Moore, 28, said she was also reducing her Labor Day travel plans.
She said trips to Galveston and the beach once felt easy to arrange. Now, higher household costs are making people think twice about driving long distances.
Fuel supplies offer little relief
Analysts say there are few easy ways to increase gasoline supplies quickly.
Kuan Dosmuratov, a research analyst at Wood Mackenzie, said the current situation is largely driven by supply concerns.
Fears about disruptions through the Strait of Hormuz have pushed up crude prices and refining margins. At the same time, attacks on Russian refineries have tightened fuel inventories.
US refineries are already operating at a very high rate. Refinery utilization has reached 98%, the highest level since 2018.
The government has also extended a Jones Act waiver. That move allows fuel to move more easily between US ports.
Washington also ended summer-blend gasoline requirements earlier than usual in an effort to limit prices.
Gasoline and diesel inventories fall
US gasoline inventories dropped by 1.2 million barrels last week to 205.7 million barrels, according to the Energy Information Administration.
That figure remains below the five-year August average of 217.6 million barrels.
Diesel prices have also reached record levels.
Tom Kloza, chief energy adviser at Gulf Oil, said retail diesel prices could surpass the previous record of about $5.82 per gallon set in June 2022.
Air travelers are also facing higher costs. AAA expects Labor Day airfares to be about 20% higher than a year ago.
For American households already dealing with higher everyday expenses, the latest jump in fuel prices could make this year’s final summer holiday more expensive than expected.
