Gas Will Cross $4 on Labor Day for the First Time Ever Recorded

The Number

The national average price of gasoline is $4.081 a gallon heading into Labor Day weekend, according to AAA. That is the highest price American drivers have ever faced on this holiday. The previous record was $3.83, set in 2012.

A year ago the average was $3.2013. Drivers are paying roughly 88 cents more per gallon than they were last Labor Day, an increase of about 27 percent.

What It Costs a Household

On a 15-gallon fill, the year-over-year difference is about $13. For a two-car household driving 24,000 miles a year at 25 miles per gallon, the same gap works out to roughly $850 over twelve months.

That is the figure worth carrying into the fall, because it does not show up as a single painful transaction. It arrives in $13 increments about sixty times a year.

Why It Is Happening Now

The pressure is on refining capacity rather than crude supply. Ukrainian strikes have taken Russian refineries offline, tightening the global market for finished fuel, and disruption to Strait of Hormuz transit has added a second layer. Both constraints hit the product side of the market, which is the side that sets pump prices.

Patrick De Haan of GasBuddy put the seasonal anomaly plainly: gasoline “is at its highest level ever recorded this late in the calendar year.” Prices normally fall through August as summer-blend requirements ease. This year they have not.

The Spread Across the Country

Hawaii is the highest state average at $5.4317. Delaware sits near the bottom at $3.9343. The week-ago national average was $4.1024 and the month-ago figure was $4.0907, which means the price has been flat at an elevated level rather than climbing sharply, and has stayed there long enough to become the baseline.

What Would Move It

Nothing on the current schedule brings refining capacity back quickly. The seasonal switch to cheaper winter-blend gasoline typically begins in mid-September and pulls prices down by a modest amount. Whether that is enough to unwind an 88-cent gap depends on how much refining capacity comes back online before then, and that is not a US decision to make.

References: Gas Prices Remain High as August Will Likely Set New Record | Another Week of Rising Fuel Prices, and for the First Time in History, $4 Gas Could Greet Drivers on Labor Day | Drivers Could See $4 Gas on Labor Day for First Time Ever | Gasoline could be at its highest Labor Day level ever this year