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Diesel, gasoline prices hit record August highs
AAA data show drivers pay $4 a gallon for gasoline and $5.40 for diesel
At this time last year, gasoline cost $3.20 a gallon and diesel was $3.70 a gallon. (David Paul Morris/Bloomberg)
Key Takeaways:
- U.S. gasoline and diesel prices reached record seasonal highs in August, averaging $4 and $5.40 per gallon as peak travel demand continued.
- Higher prices reflect constrained global fuel supplies tied to the Iran conflict and Russia-Ukraine war, while U.S. gasoline inventories fell to multiyear lows.
- The Energy Department expects gasoline and diesel prices to ease later this year but forecasts remain well above seasonal norms after a major revision.
It’s peak driving season in the U.S., and gasoline and diesel prices have never been this expensive this late in the year.
Gasoline and diesel prices are at record seasonal highs, according to data from AAA. Drivers are paying an average of $4 a gallon for gasoline and $5.40 a gallon for diesel in the second week of August for the first time. That comes as millions of Americans typically take to the road for vacations and family visits.
At this time last year, gasoline cost $3.20 a gallon and diesel was $3.70 a gallon.
There’s little relief on the horizon as both the U.S. war on Iran and the Russia-Ukraine conflict stretch on, crimping global supplies of crude oil and fuel from those major producing regions.
The Department of Energy forecasts that gasoline will cost an average of $4 a gallon this quarter and then drop to $3.72 in the fourth quarter, a figure well above seasonal norms. For diesel, the lifeblood of trucking and the industrial economy, the price per gallon will fall to just shy of $5 by the end of the year. Those forecasts mark a major upward revision from a month ago.
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Meanwhile, gasoline inventories in the U.S. are at their lowest level since November 2025, according to government data released Aug. 12. In regions such as New York and New Jersey, they are at their lowest level since November 2024.
American drivers travel about 3 trillion miles annually in cars and trucks, according to Federal Reserve Bank of St. Louis data. Soaring fuel costs are likely to be a key issue for both drivers and politicians in the second half of the year.
Gasoline demand wanes after the peak summer travel months, and fuel makers, which have been raking in massive profits to meet global demand, are set to maximize diesel production to replace lost supply. That may place a ceiling on gasoline inventories as refineries produce less of the road fuel, leading to sustained higher prices.
Those factors come as Americans head to the polls in November for midterm elections while watching one of the most visible cost-of-living pressures emblazoned above gas station forecourts.
To be sure, fuel prices are below the wartime peaks reached earlier in the year, which also fell short of the historic price spikes that followed Russia’s invasion of Ukraine. U.S. inflation data released Aug. 12 for July also was subdued, showing energy and gasoline prices falling for the second consecutive month as more oil made it out of the Persian Gulf during a collapsed U.S.-Iran ceasefire.
