Business · News 61
U.S. gasoline hit a Labor Day record of $4.15 per gallon, up 30% year-on-year, while diesel surged to $5.90. Fuel prices could remain elevated due to escalating tensions between the U.S. and Iran, Russian refinery outages, and U.S. gasoline inventories falling below seasonal norms. The surge in prices has become a political liability, with the Iran war estimated to have added over $100 billion to Americans’ energy costs ahead of the midterms.
Motorists are feeling significant pain at the pump, with the national average cost of unleaded gasoline at $4.15 per gallon, surpassing the previous Labor Day record of $3.83 from 2012. Diesel prices have also risen to $5.90 per gallon, up from $3.70 a year ago. States like California, Hawaii, and Washington currently pay the highest prices, while Utah, Colorado, Montana, Idaho, Wyoming, and North Dakota have seen the steepest price increases since the war began.
High fuel costs have led to reduced holiday travel, with drivers cutting back on road trips and domestic air fares being approximately 20% more expensive than the previous year. Renewed military escalations between the U.S. and Iran have reversed crude price declines, with Brent crude jumping over $6 to trade above $97 and WTI at over $92. The U.S. military struck and sank three Iranian oil tankers in response to Iranian attacks on U.S. Navy warships, including a VLCC near Kharg Island and two Suezmax vessels near the Gulf of Oman.
Iran’s Islamic Revolutionary Guard Corps (IRGC) launched Qasem Basir anti-ship ballistic missiles, though Washington denied any vessels were damaged. Meanwhile, Israeli forces bombarded southern Lebanon targeting Hezbollah, prompting Iran to retaliate by striking bases in Kuwait and the UAE. Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that U.S. oil and gas companies in the Middle East could be legitimate targets if U.S. attacks continue.
Russian refinery attacks by Ukraine have further tightened global fuel supplies, with Moscow halting diesel and gasoline exports due to 40% of its refinery infrastructure being knocked out. U.S. gasoline inventories dropped to 205.7 million barrels, below the five-year August average of 217.6 million barrels. Europe has ramped up fuel imports from the U.S., with U.S. refiners operating near 100% utilization rates.
Overall, high fuel prices are a major economic burden and political flashpoint. According to Brown University’s Iran War Energy Cost Tracker, the war has cost American consumers over $100 billion in inflated energy costs, impacting the Trump administration ahead of the midterm elections. Polling data from POLITICO shows 46% of Americans believe the spike in fuel prices will influence their voting decisions in November.
