US Gas Prices Above $4 Reignite Pressure on Purchasing Power

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As the Labor Day weekend, celebrated Monday, September 7, draws near, American households are facing a fresh surge in energy prices. Gasoline is expected to exceed $4 per gallon for the first time during this late-summer holiday, while diesel has just hit a record and airline tickets, food, and several everyday expenses continue to weigh on budgets.

According to GasBuddy, the national average price of gasoline could reach $4.03 per gallon on Monday, surpassing the previous Labor Day record of $3.83 set in 2012. By Thursday, the national average was already around $4.13, about a dollar higher than a year earlier.

This rise comes as the conflict between the United States and Iran continues to fuel concerns about global oil supply. U.S. crude has moved back above $90 per barrel, while attacks on Russian refining infrastructure are also contributing to tensions in oil products markets.

A gallon above $4, a psychological threshold for households

Gas prices hold a special place in Americans’ perception of their economic situation. Unlike other expenses, its price is displayed daily on gas stations’ signs and immediately affects commuting, leisure, and vacation travel.

For Patrick De Haan, an analyst at GasBuddy, current prices are not an absolute record, but they have never been this high so late in the year. Motorists could thus experience, for the first time, a Labor Day with a national average above $4.

Some regions are more affected. Colorado, Utah, Idaho, Montana, Wyoming, and North Dakota are among the states with the largest increases since the start of the war, while California, Hawaii, and Washington state show among the highest average prices in the country.

Gasoline stocks fall

The rise is not explained solely by the price of oil.

U.S. gasoline inventories fell by 1.2 million barrels in the week ended August 28, to 205.7 million barrels, according to the Energy Information Administration (EIA). The five-year average for August is around 217.6 million barrels.

U.S. refineries are operating at around 98% of capacity, their highest level since 2018, which limits the ability to ramp up production quickly.

Washington has already eased some domestic maritime transport rules and ended summer fuel requirements earlier than planned to boost availability. So far, these measures have not been enough to sustainably bring prices below $4.

U.S. exports also fuel the debate

The United States is simultaneously exporting substantial quantities of crude oil and refined products.

According to the EIA, U.S. exports of refined petroleum products have risen by more than 10% from a year earlier, as several countries seek to secure supplies in a market disrupted by conflicts.

By late August, total U.S. exports of refined petroleum products stood at around 7.4 million barrels per day.

For some drivers, this situation fuels confusion: the United States remains one of the world’s leading hydrocarbon producers, yet American consumers still bear the tensions of the global market.

Diesel hits a record at $5.85

Gasoline is not the only fuel affected.

The average price of diesel has reached $5.85 per gallon, surpassing the previous record of about $5.82 set in June 2022.

The economic impact could be broader than gasoline’s. Diesel powers a large portion of trucks, agricultural equipment, construction machinery, and delivery networks.

When its price rises, transport costs for fruits, vegetables, meats, industrial goods, or materials also rise. Part of this increase can then be passed on to consumers.

The Federal Reserve notes already, in its latest Beige Book, that high energy prices weigh on the margins of some companies and on household spending. In the Cleveland region in particular, consumption has fallen for the fourth consecutive period, with surveyed businesses citing higher fuel and food prices as factors weighing on budgets.

Labor Day travel also costs more

For Americans who choose to fly, the bill also rises.

AAA reservation data show the average price of a domestic round-trip ticket at around $750, up about 2% from a year earlier.

For the most popular Labor Day destinations in the United States, the increase is much steeper: nearly 20%, with an average ticket close to $790. Hotels in the United States are also about 9% more expensive than in 2025.

Thus, one should nuance the claim that all airplane tickets are 20% more expensive: this rise mainly affects the most popular domestic destinations.

General inflation at 3.4%, but energy much higher

The latest complete statistics available, those for July, show U.S. inflation at 3.4% year over year.

But this average masks wide differences. Over twelve months:

• energy up 14.7%;
• gasoline up 24.6%;
• electricity up 4.2%;
• food up 3%;
• housing up 3.2%.

Airfare prices, meanwhile, were up 25.5% over a year in the July price index.

August figures, which will allow a more precise measurement of the recent energy-price intensification, will be released on September 11.

Real wages rise little

For households, the challenge is not only price levels, but their movement relative to incomes.

In July, the real average hourly wage of all private-sector employees was 0.2% lower than a year earlier after inflation. For production and non-supervisory workers, the decline was 0.1%.

In other words, despite nominal wage growth, hourly purchasing power was broadly stagnant.

The job market remains relatively solid: the U.S. economy added 162,000 jobs in August, while the unemployment rate stayed unchanged at 4.1%.

$1.26 trillion in credit card debt

Households also have less financial headroom than in previous years of rising prices.

In the second quarter of 2026, total American household debt reached $18.8 trillion, according to the New York Fed.

Credit card balances alone rose by $21 billion in three months, to $1.263 trillion. Auto loans, meanwhile, total about $1.713 trillion.

Delinquencies do not currently point to a broad spike: 4.7% of all debts were in some stage of delinquency at the end of June. But the New York Fed notes that new delinquencies on auto loans and credit cards remain at elevated levels.

Consumer morale deteriorates

Pressure also shows up in opinion surveys.

The University of Michigan’s Consumer Confidence Index fell to 51.7 points in August, from 55.2 in July and 58.2 a year ago, a year-over-year drop of 11.2%.

Even more telling, only 8% of surveyed consumers expect their incomes to grow faster than inflation over the next twelve months, down from 18% in December 2024.

One-year inflation expectations have risen to 4.3%, vs. 4.2% in July. In the August survey, 36% of consumers now cited inflation as the main potential source of economic hardship, up from 23% at the start of the year.

Trump faces an ever more political equation

These developments also pose a political problem for Donald Trump, who had promised to lower energy costs.

The American president has recently intensified his criticisms of refiners and fuel distributors, whom he accuses of profiting from high prices. On August 14, he nonetheless stated that Americans should accept paying “a little more” for gasoline, in his view to prevent Iran from obtaining a nuclear weapon.

As the midterm elections approach, the equation is delicate: the economy continues to create jobs and consumer spending remains resilient, but the everyday visible prices — gasoline, diesel, food and transport — stay high.

The Fed thus describes an economy that is still growing at a modest pace, but where consumers are becoming more price-sensitive and reduce certain expenditures, especially when fuel and financing costs rise.

Labor Day weekend thus offers a particularly concrete snapshot of this tension: a still-robust labor market, but households whose purchasing power is squeezed by energy, travel, and high debt levels.