Gas prices are surging just before Labor Day, as diesel nears an all-time high
Gasoline prices are surging ahead of Labor Day, with AAA predicting travelers will face the highest pump prices on record for the holiday weekend amid ongoing conflict in the Strait of Hormuz.
The national average for regular gasoline reached $4.14 a gallon Thursday, up 4 cents from a week earlier, according to AAA data. Diesel averaged $5.78 a gallon, just below its record of $5.81 set in June 2022.
Gas prices have never eclipsed $4 per gallon on Labor Day, the motor club noted.
"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 in a report.
Although inflation has cooled from its post-pandemic highs, high fuel costs are squeezing consumers and businesses alike. Since the start of the Iran war, higher gas and diesel prices have cost Americans more than $741 per household, according to a tracker from Brown University.
Soaring diesel costs are raising expenses for trucking, construction, agriculture and other industries that rely on heavy-duty vehicles and machinery.
"Diesel is just a couple of ticks away from hitting a new record," GasBuddy petroleum analyst Patrick De Haan told CBS News. "That will happen."
High diesel prices can stoke inflation by raising the cost of transporting goods across the U.S., thereby pushing up consumer prices.
"The everyday consumer will see higher diesel prices in the consumer goods they purchase," said Susan Bell, senior vice president of downstream research at Rystad Energy. "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."
President Trump on Tuesday met with U.S. oil refiners to discuss increasing capacity as the White House seeks to contain sky-high oil prices.
Last week, he also struck a deal with Venezuela to gain control of about 65 billion barrels of its proven oil reserves. But energy experts caution that it could take years for those fields to yield enough crude to move the needle on fuel prices in the U.S.
Energy analysts say fuel prices are likely to remain elevated until shipping resumes in the Strait of Hormuz, a key waterway between the Persian Gulf and the Gulf of Oman through which one-fifth of the world's oil supply flows.
Oil prices rose again Thursday as Iran claimed new strikes targeting U.S. forces across the Middle East. In afternoon trading, the price of Brent crude, the international standard, was $95.55 per barrel, while the U.S. benchmark hovered around $91.50.
Oil accounts for about half the cost of a gallon of gas in the U.S. The rest is a combination of refining, taxes and marketing, according to the U.S. Energy Information Administration. The time of year also influences gas prices, as demand for fuel rises during warmer months.
"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," De Haan said.
