Gas Just Hit Its Highest Labor Day Price Ever, and Diesel Is Even Worse

Keypoints:

• US regular gas averaged $4.15 a gallon on Labor Day, a record, up from $3.82 in 2012
• Diesel hit a record $5.90 a gallon, up from $3.71 a year earlier
• Wars in Ukraine and Iran have knocked out roughly 5 million barrels a day of refining capacity
• Ukrainian strikes damaged roughly 40% of Russia's oil refining infrastructure
• Analysts warn diesel could keep climbing into 2027 due to a global refining shortage

Gas prices hit their highest Labor Day level on record this year, averaging $4.15 a gallon nationwide, according to AAA. That's nearly a full dollar higher than last year and well past the previous holiday record of $3.82 set in 2012. Diesel fared even worse, striking an all-time high of $5.90 a gallon, up from just $3.71 a year earlier.

Two separate wars are driving the shortage. Ukrainian drone strikes have knocked out roughly 40% of Russia's oil refining capacity, forcing Moscow to ban diesel exports and start importing fuel instead. 

At the same time, Iran's attacks on tankers and infrastructure in the Strait of Hormuz have taken Middle Eastern refineries offline too. Combined, the two conflicts have shut down refineries representing about 5 million barrels a day of capacity, according to Valero's chief operating officer.

Vitol CEO Russell Hardy laid out the scale of the shortfall bluntly, noting the world is missing nearly 2 million barrels a day each from Russia and the Middle East, with global inventories already drawn down toward the bottom of available stockpiles. "We keep eating into the surplus that exists around the world," he said.

Gas prices usually fall once summer driving season ends, as refineries shift to a cheaper winter blend. That seasonal relief isn't showing up this year. US refineries are already running near 98% capacity, leaving little cushion if a storm or new disruption knocks any additional capacity offline, and Reuters reporting based on industry executives suggests diesel supplies could stay tight well into 2027.