Gas prices hit record Labor Day high as diesel nears all-time peak

Drivers heading out for the Labor Day weekend are facing pump prices unlike anything the holiday has seen before. The national average for regular gasoline climbed to $4.14 a gallon on Thursday, according to AAA data, marking the first time gas has ever exceeded $4 per gallon on Labor Day itself. Diesel, meanwhile, sits at $5.78 a gallon—just three cents below the record of $5.81 it hit in June 2022. Energy analysts say that record will fall soon.

The surge defies the seasonal pattern that normally brings relief at the pump as summer driving season winds down. Typically, fuel demand drops in early fall, and prices follow. Not this year. The culprit is crude oil, which remains stubbornly expensive due to geopolitical tensions that have roiled global energy markets. "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 noted in its analysis.

The impact ripples far beyond the gas station. Diesel powers trucks, construction equipment, and farm machinery—the backbone of industries that move goods across the country. When diesel gets expensive, those costs get passed along. Groceries shipped from California, fruits and vegetables transported by truck, goods moving by rail—all of it becomes more expensive to move. Susan Bell, senior vice president of downstream research at Rystad Energy, put it plainly: "The everyday consumer will see higher diesel prices in the consumer goods they purchase." High diesel costs, in other words, become high grocery bills.

Since the start of the Iran war, elevated fuel prices have cost American households more than $741 each, according to an inflation tracker from Brown University. That figure captures the cumulative squeeze on family budgets and business operations alike. Patrick De Haan, a petroleum analyst at GasBuddy, told CBS News that diesel is "just a couple of ticks away from hitting a new record. That will happen."

The White House has taken notice. President Trump met with U.S. oil refiners on Tuesday to discuss ways to increase refining capacity and contain oil prices. The administration has also pursued negotiations with Venezuela to gain access to roughly 65 billion barrels of proven oil reserves. Energy experts, however, caution that even if those fields come online, it could take years before they meaningfully affect fuel prices in the United States.

For now, the trajectory depends on events thousands of miles away. Fuel prices are likely to stay elevated as long as tensions persist in the Middle East, particularly around the Strait of Hormuz—a narrow waterway between the Persian Gulf and the Gulf of Oman through which roughly one-fifth of the world's oil supply flows. Iran has claimed new strikes targeting U.S. forces across the region, and oil markets have responded accordingly. Brent crude, the international benchmark, was trading around $95.55 per barrel in afternoon trading, while the U.S. benchmark hovered near $91.50.

Oil accounts for roughly half the price of a gallon of gas at the pump, according to the U.S. Energy Information Administration. The rest comes from refining costs, taxes, and marketing. De Haan noted that while fall typically brings price declines, the current environment is different. "Typically, prices decline in the fall, but right now, it has more to do with geopolitical tensions that could change at a moment's notice," he said. That unpredictability—the sense that prices could shift sharply based on events beyond anyone's control—is itself part of the squeeze consumers and businesses are feeling as they head into the final stretch of summer.