Americans faced unprecedentedly high gasoline prices over the Labor Day holiday as the war in the Middle East continued to drive up energy costs, coinciding with the launch of political campaigns for the U.S. congressional midterm elections.
Patrick De Haan, an analyst at GasBuddy, forecast the national average gasoline price would reach $4.03 per gallon on Labor Day, well above the previous record of $3.83 per gallon set in 2012.
“While gas prices are not at their all-time highest, they have reached a record level this late in the year, meaning Americans could see a national average above $4 per gallon for the first time on Labor Day,” De Haan wrote in a recent blog post.
According to GasBuddy’s price-tracking service, the U.S. average gasoline price stood at around $4.13 per gallon on Thursday, nearly $1 higher than the average recorded a year earlier. Analysts say a $4-per-gallon price represents a significant burden for many consumers.
Gasoline prices are among the most closely watched economic indicators for U.S. consumers and can quickly shape perceptions of the broader economy. With prices remaining above $4 per gallon for much of the year, the issue has become a growing concern for President Donald Trump and his Republican Party.
Trump has pledged to lower energy costs. In recent weeks, he has stepped up criticism of oil refiners and gas stations, accusing them of profiting from higher gasoline prices. On August 14, Trump said Americans should be prepared to pay a “small amount extra” for gasoline to ensure Iran cannot obtain a nuclear weapon.
Labor Day typically serves as the final summer holiday for many Americans, with large numbers traveling by road or air.
Gasoline prices at the pump have risen alongside crude oil prices, which climbed above $90 a barrel again last week after renewed U.S.-Iran military action heightened concerns over disruptions to global crude oil supplies.
Prices for distillate products, including diesel and heating oil, have also increased, partly due to continued attacks on Russian refineries that have raised concerns about supply disruptions.
Retail fuel and crude oil prices typically move in tandem because crude oil is the primary component of fuel production costs.
“It’s completely out of control,” said 57-year-old Randy O’Brien while filling up her truck at a gas station near Evergreen, Colorado.
Colorado, Utah, Idaho, Montana, Wyoming and North Dakota have recorded some of the steepest price increases since the war began. California, Hawaii and Washington currently have the highest average gasoline prices in the United States.
Holiday Travel Plans Cut Back
O’Brien, who drives her truck for a 40-minute round trip each day to work at Home Depot, said she currently cannot afford to spend more than $15 on gasoline.
She attributed some of the price increase to higher U.S. exports of crude oil and fuel following the start of the war with Iran, which prompted several countries to turn to the United States for fuel supplies.
According to the U.S. Energy Information Administration (EIA), exports of refined petroleum products have increased by more than 10% from a year earlier.
With even basic grocery purchases becoming more expensive and household budgets under increasing pressure, 28-year-old Madison Moore of Houston said she would scale back her Labor Day travel plans.
“It was always easy to pack up the car, head to Galveston, go to the beach and have a barbecue or something. But people don’t want to travel that way anymore,” Moore said while filling her car at a Shell station in Houston.
Kuan Dosmuratov, a research analyst at consultancy Wood Mackenzie, said the continued rise in gasoline prices was primarily a supply-side problem. Concerns over disruptions to energy shipments through the Strait of Hormuz have pushed up crude oil prices and refining margins, while attacks on Russian refineries have contributed to an overall reduction in fuel inventories.
The EIA reported last Wednesday that U.S. gasoline inventories fell by 1.2 million barrels in the previous week to 205.7 million barrels. The five-year average for August stands at 217.6 million barrels.
Prices for other refined products have also risen sharply. U.S. diesel prices reached a new record high last week, while air travelers are expected to pay 20% more for Labor Day tickets than a year ago, according to the American Automobile Association (AAA).
