US gas prices hit record Labor Day high amid Iran conflict and refinery constraints
Regular gasoline averaged $4.14 a gallon heading into the Labor Day weekend, driven by geopolitical tensions and production bottlenecks.
What happened
The average price of regular gasoline in the US reached $4.14 a gallon before Labor Day 2025, nearly $1 higher than the prior year and above the previous Labor Day record of $3.82 set in 2012. Diesel hit a national average of $5.85 a gallon on Friday, marking a record. Prices surged after the US and Israel attacked Iran in February; crude oil traffic through the Strait of Hormuz has plunged, and Iran has refused to reopen the waterway. Energy Secretary Chris Wright acknowledged prices are higher than Labor Day 2025 but said the administration is working to push them down, citing futures market forecasts for prices about $0.35 cheaper per gallon in November.
Context
High fuel costs are affecting consumer behavior, with some households reducing summer travel due to expense. Diesel price spikes carry multiplier effects—trucks and freight systems pass increased transportation costs to consumers at grocery stores and through delivery services. US refineries are operating at 98% capacity under harsh Texas heat, creating vulnerability to disruptions. Beyond the Middle East, Ukrainian drone attacks on Russian refineries and declining Chinese refinery output are further constraining global diesel supplies. Gas prices typically decline as the summer driving season ends and refineries switch to cheaper winter blends, but this year's combination of geopolitical and production constraints makes price trajectory unpredictable.