U.S. Gas Prices to Hit Record Highs on Labor Day

Gas prices in the United States are set to reach unprecedented highs on Labor Day, with the national average expected to climb significantly. The only exception to this trend is Indiana. This rise in costs is largely due to recent weeks of increases sparked by the onset of conflict in Iran.

According to GasBuddy, a fuel savings platform, American drivers could face an average of $4.03 per gallon during the Labor Day weekend. This figure represents an 87-cent increase from last year and marks the highest Labor Day gas price ever recorded.

Nevertheless, this projection is a slight relief compared to current prices. As of Thursday morning, the national average stood at $4.144 per gallon, higher than both the previous week and month, as well as the same period last year, per the American Automobile Association (AAA).

California’s drivers continue to endure the highest gas prices in the nation, at $5.782 per gallon, a steep rise from $4.606 a year earlier. Hawaii and Washington also see prices above the $5 threshold, with averages of $5.410 and $5.472 per gallon, respectively. Conversely, Indiana recorded the lowest statewide average at $3.448 per gallon.

Predictions for Labor Day Prices

GasBuddy’s predictions indicate that the average price could hit $4.03 per gallon during Labor Day weekend. This marks an 87-cent increase compared to the same time last year, the highest on record in nominal terms. The previous record of $3.83 per gallon was set in 2012, amid turmoil in the Middle East that disrupted supply.

U.S. drivers have faced continued price hikes following the start of the Iran conflict. Volatility in international relations and supply disruptions, such as the effective closure of the Strait of Hormuz, have significantly impacted oil prices. Before a joint U.S.-Israel strike on Iran on February 28, the average price was below $3 per gallon.

Patrick De Haan, from GasBuddy, noted the challenges faced by motorists, highlighting the fluctuation of prices influenced by global tensions rather than typical supply and demand dynamics.

Comparisons to Previous Years

Last year, the national average on Labor Day was $3.19 per gallon, nearly one dollar less than today, according to AAA data. At that time, the administration of President Donald Trump took credit for lower gas prices, fulfilling a campaign promise from 2024.

The record-highs this year mark a stark contrast to the previous administration’s achievements and cannot be directly compared to past years, including those under former President Joe Biden. During Biden’s tenure, rising gas prices became a significant issue, influencing his 2024 campaign decisions.

Upon taking office in January 2021, average prices were $2.4 per gallon, later climbing above $3 by December. The peak came in June 2022, reaching $5.06 per gallon, the highest on record, before beginning to decline.

Price Dynamics During Previous Administrations

During Trump’s first term, prices were relatively low, with an average of $2.48 per gallon. Factors contributing to this included stable oil markets and reduced demand from the COVID-19 pandemic-triggered lockdowns. Record low demand led to lower prices overall.

In Trump’s 2024 campaign, he cited these achievements to criticize higher prices under Biden’s administration. He also promised to lower gas prices if re-elected, though they had already fallen below $3 per gallon before the Iran conflict started.

Following the renewed Middle East tensions, gas prices have increased more than 30%. In a recent address, Trump defended the price increases as a necessary measure to counter Iran’s nuclear ambitions.