U.S. gas prices hit record Labor Day high amid Iran war and refinery problems

Driving across the United States for one last summer trip has never cost more over the Labor Day weekend. The average price of regular gasoline reached $4.14 a gallon, according to AAA, nearly $1 higher than a year earlier and above the previous Labor Day record of $3.82, set in 2012.

Nicole Collins had planned to drive from Philadelphia to South Carolina to visit friends. Instead, her family spent much of the summer close to home because driving had become too expensive. At a station in Claymont, Delaware, where regular gas sold for $4.199 a gallon, she said, “Gas is pretty high right now. It doesn't help that we also have a baby, so we also have to pay for that.”

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Gas is pretty high right now. It doesn't help that we also have a baby, so we also have to pay for that.

Prices surged after the United States and Israel attacked Iran in February and have not settled. Crude oil traffic through the Strait of Hormuz has plunged, and Iran has refused to reopen the waterway. “Everything points to the Iran war and the Strait of Hormuz,” said Tom Seng, a professor of energy finance at Texas Christian University.

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Everything points to the Iran war and the Strait of Hormuz.

Energy Secretary Chris Wright gave few details about when drivers might see relief. “Yes, they're higher today, but we're doing everything we can to push them down,” he said Sunday on ABC's “This Week.” The national gasoline average remains below the all-time record of $5.02 a gallon, set in June 2022, but diesel reached a record $5.85 a gallon on Friday.

Diesel costs affect trucks and other freight systems, with higher transportation expenses reaching consumers through grocery prices and package deliveries. Gasoline prices usually fall after the summer driving season as refineries switch to a cheaper winter blend, but this year's outlook remains uncertain. U.S. refineries are operating at 98% capacity amid unusually harsh Texas heat, while hurricanes could take systems offline. Ukrainian drone attacks on Russian refineries and declining output at Chinese refineries are also squeezing supplies. Wright said the Trump administration was taking steps to increase production and that futures markets pointed to lower prices in the coming months.

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Yes, they're higher today, but we're doing everything we can to push them down.