U.S. gasoline prices reach record high for Labor Day weekend
The average price of regular unleaded gasoline hit a new Labor Day record of $4.15 per gallon, driven by elevated crude oil costs and supply disruptions.
The national average price for a gallon of regular unleaded gasoline rose to $4.15 on Monday, the highest level ever recorded for the Labor Day holiday, according to the American Automobile Association. The previous record of $3.82 was set in 2012. Prices remain about 30% above the $3.20 average seen a year earlier, despite a recent dip from the May peak of $4.56.
"While gasoline demand typically declines after the summer driving season — often leading to lower prices — this year's elevated crude oil costs have offset that seasonal trend," said Brittany Moye, a spokesperson for AAA.
Diesel prices also reached a record, climbing to $5.90 per gallon, up from $3.71 a year ago. The rise follows higher crude oil futures, with West Texas Intermediate trading around $92 per barrel and Brent near $97, up from pre-conflict levels of $67 and $72 respectively.
Analysts attribute the price pressure to constrained global oil supply. Disruptions in the Strait of Hormuz have reduced tanker traffic, and refineries in the Middle East and Russia have been offline due to ongoing conflicts. U.S. gasoline inventories were 6% below the seasonal average for the week ending Aug. 28.
"We still have a supply disruption in the Middle East at the same time refineries in both the Middle East and Russia have been damaged due to conflicts in those regions, which reduces supply that reaches the market," said Andy Lipow, president of Lipow Oil Associates.
The industry is expected to switch to winter-grade gasoline in mid-September, which is generally cheaper to produce than the summer blend. The Environmental Protection Agency announced that winter-blend fuel could be sold starting Sept. 1, an early transition that may provide some relief at the pump.
"The good news for consumers is that the industry transitions [in September] to winter-grade gas, which will provide some measure of relief at the pump," Lipow added.
Experts note that the future trajectory of prices will depend on whether geopolitical tensions ease and shipping lanes in the Strait of Hormuz reopen fully.