US drivers are facing record diesel prices and the most expensive Labor Day petrol prices ever recorded, as disruption around the Strait of Hormuz continues to drive up the cost of crude oil.
The national average for regular gasoline reached $4.14 a gallon on Thursday, according to AAA, rising by four cents in a week. Diesel climbed to a record $5.85 a gallon on Friday, surpassing the previous high of $5.81 set in June 2022.
AAA said gasoline prices had never previously exceeded $4 a gallon over the Labor Day holiday weekend. The motor club warned that this year’s usual seasonal decline in demand had been overwhelmed by the cost of crude.
“Even though gasoline demand decreases this time of year, typically bringing down gas prices, this year is different due to the high cost of crude oil,” AAA said.
Strait of Hormuz disruption drives fuel costs
The Strait of Hormuz, between Iran and Oman, is a vital route for global energy supplies. About one-fifth of the world’s oil and petroleum products normally pass through the waterway, making continued disruption a major concern for traders and energy companies.
Brent crude, the international benchmark, was trading at about $95.55 a barrel on Thursday, while US benchmark West Texas Intermediate stood near $91.50. Prices rose after Iran claimed new strikes against US forces across the Middle East.
Oil accounts for roughly half the price of a gallon of gasoline in the United States. Refining, taxes and marketing make up much of the remainder, while seasonal demand also influences prices.
“Typically, prices decline in the fall, but right now, it has more to do with geopolitical tensions that could change at a moment’s notice,” said Patrick De Haan of fuel-price analysis firm GasBuddy.
The pressure is being felt beyond motorists. Higher diesel costs are increasing operating expenses for trucking, construction and agriculture, while businesses that depend on heavy machinery are also facing larger fuel bills.
Susan Bell, senior vice-president of downstream research at Rystad Energy, said the impact would feed through into the cost of everyday goods.
“The everyday consumer will see higher diesel prices in the consumer goods they purchase,” she said. “Think of the groceries that get shipped around the nation, and fruits and vegetables that come from California and move by truck or rail. It’s inflationary.”
A Brown University tracker estimates that higher gasoline and diesel prices since the Iran war began on February 28 have cost US households more than $741 each. The researchers say the additional expense comes directly from the increase in fuel prices compared with what they estimate consumers would have paid without the conflict.
President Donald Trump met US oil refiners on Tuesday to discuss ways of increasing capacity as his administration seeks to contain the surge in fuel prices. The White House has also announced a deal giving the United States control of more than 65 billion barrels of proven Venezuelan oil reserves.
Energy specialists have cautioned, however, that reviving Venezuela’s oilfields and bringing additional crude to market could take years, limiting any immediate effect on prices at American filling stations.
Fuel prices are expected to remain elevated while shipping through the Strait of Hormuz is restricted. With geopolitical developments capable of changing the outlook rapidly, the normal autumn relief at the pumps may be delayed.
