Fuel prices surge ahead of Labor Day weekend

Gasoline prices are climbing into Labor Day weekend, and diesel is nearing a record high as rising crude oil prices and disruptions around key shipping routes squeeze drivers, businesses and energy markets.

The national average for regular gasoline reached $4.14 a gallon Thursday, according to AAA data cited by CBS News and NBC News. CBS reported that was up 4 cents from a week earlier, while NBC said it was up 2 cents from Wednesday. AAA predicted travelers would face the highest pump prices on record for the holiday weekend, noting that gas prices have never topped $4 a gallon on Labor Day.

Diesel averaged $5.78 a gallon Thursday, just below the record of $5.81 set in June 2022. NBC reported that diesel prices have risen more than 53% since the war with Iran began in late February, when the national average was $3.76 a gallon.

“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.

Crude oil rose for a fourth straight trading session Thursday, NBC reported, extending a monthlong increase that has pushed fuel prices higher. Brent crude, the international benchmark, surpassed $97 a barrel Thursday morning, NBC reported, before trading at $95.55 in the afternoon, according to CBS. The U.S. benchmark hovered around $91.50.

Energy analysts cited the war in Iran and disruptions in the Strait of Hormuz, the waterway between the Persian Gulf and the Gulf of Oman through which about one-fifth of the world’s oil supply normally passes. NBC reported that attacks on ships in the strait, along with retaliatory U.S. strikes on Iranian targets, have left daily vessel traffic minimal. CBS reported that oil rose again Thursday after Iran claimed new strikes targeting U.S. forces across the Middle East.

President Donald Trump said Wednesday that the latest round of U.S. strikes on Iran would not last “too long,” but added, “We’re prepared to do another one any time we want.” He also said U.S. forces were “bringing lots of boats out” of the Strait of Hormuz each day. NBC reported that the comments did little to ease pressure on oil prices.

Diesel prices are drawing particular concern because the fuel powers trucks, trains, boats, farm equipment and construction machinery. Higher diesel costs can raise expenses across supply chains and eventually reach consumers.

“The everyday consumer will see higher diesel prices in the consumer goods they purchase,” Susan Bell, senior vice president of downstream research at Rystad Energy, told CBS News. “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.”

GasBuddy petroleum analyst Patrick De Haan told CBS News that diesel is “just a couple of ticks away from hitting a new record.” He added: “That will happen.”

The war in Ukraine is also adding pressure. ING commodities analysts wrote that Russia has banned diesel exports until the end of September after Ukrainian drone attacks on refineries, saying Russia is the world’s second-largest diesel exporter and that the combined disruptions equal about 20% of global seaborne diesel trade. The analysts said meaningful relief would likely require either higher oil and gas flows through the Persian Gulf or a resumption of Russian exports.

The higher fuel costs are weighing on households. Since the start of the Iran war, higher gas and diesel prices have cost Americans more than $741 per household, according to a Brown University tracker cited by CBS.

Trump met Tuesday with U.S. oil refiners to discuss increasing capacity as the White House seeks to contain oil prices. CBS also reported that he struck a deal last week with Venezuela to gain control of about 65 billion barrels of proven oil reserves, though energy experts cautioned it could take years for those fields to produce enough crude to affect U.S. fuel prices.

Federal Reserve Gov. Christopher Waller said Thursday he expects upcoming consumer and wholesale inflation readings to be “reasonable,” NBC reported. “So far energy [prices have] not bled into other goods and prices,” he said, though he added that if August inflation data “comes in hot, I would consider a rate hike.”