Labor Day Gas Prices Set Holiday Record as Diesel Reaches All-Time High

U.S. drivers entered Labor Day with regular gasoline averaging about $4.15 a gallon and diesel at an all-time high of $5.90, increasing costs for holiday travelers and businesses transporting goods.

AAA’s September 6 readings showed gasoline roughly 95 cents above its year-earlier level, while diesel had risen from about $3.71.

Gasoline Passes the Labor Day Benchmark

AAA said in its September 3 fuel report that the national gasoline average had never previously exceeded $4 on Labor Day. The earlier holiday record was $3.82, set on September 3, 2012. By September 3 this year, the average was already $4.14.

The gasoline record applies specifically to Labor Day. The national all-time peak remains about $5.02, reached in June 2022. Diesel reached a record $5.85 on September 4, according to the Associated Press report, before climbing further over the weekend.

Diesel’s importance extends across the economy. It powers freight trucks, trains, barges and much of the country’s farm and construction equipment, the U.S. Energy Information Administration explains. Its higher cost puts pressure on the businesses that grow, manufacture and deliver goods, including food.

War and Heavy Refinery Use Strain Supplies

The disruption began after the United States and Israel launched strikes against Iran on February 28. In its March oil market report, the International Energy Agency documented damage to Middle Eastern energy infrastructure and a near halt in tanker traffic through the Strait of Hormuz, a major route for oil exports.

Shipping remained constrained months later. The EIA’s August oil market outlook described renewed tanker attacks in July and reduced shipments through the waterway, which helped drive another increase in crude prices.

U.S. refiners have been running hard. Federal figures released September 2 showed refineries operating at 98% of capacity during the week ended August 28, processing about 17.5 million barrels of crude daily.

Gasoline inventories were 6% below their five-year seasonal average; distillate inventories, which include diesel and heating oil, were 14% below average. The figures appear in the EIA’s weekly petroleum report.

The figures suggest that heavy refinery activity has yet to restore the inventory cushion available in a more typical year.

Wright Points to Possible Autumn Relief

Energy Secretary Chris Wright offered a cautiously optimistic outlook on September 6. Speaking to ABC News, he said November gasoline futures were about 35 cents a gallon cheaper than current levels, indicating that traders expected prices to fall.

He also pointed to declining demand after the summer travel season and administration efforts to increase production, according to the interview transcript.

Wright declined to offer a firm personal forecast. “Trust the market, certainly don’t trust my predictions,” he said.

Seasonal conditions can help. Gasoline typically costs less in winter, when driving demand eases and refiners can use cheaper components. The EIA’s explanation of price fluctuations also identifies crude supply disruptions, refinery problems and falling inventories as factors that can push prices upward. Autumn’s arrival alone offers no assurance of sustained relief.

September Supply Figures Will Test the Outlook

The next federal Weekly Petroleum Status Report is scheduled for September 10, with publication shifted because of the Labor Day government closure, according to the EIA release schedule.

Its inventory and refinery figures will help show whether fuel supplies are recovering as summer travel demand recedes. Rebuilding those stocks would give the market more protection against another interruption in production or deliveries.