The prices of gasoline across the United States hit the significant $4 per gallon mark on Monday for the first time in over three years, driven by the escalating conflict in the Middle East, although the national average slightly retreated.
According to GasBuddy, prices settled at $3.950 per gallon, while the American Automobile Association (AAA) reported a closing price of $3.990 per gallon.
The national average at pumps reached $4.018, the highest level since August 2022 when global energy markets were disrupted by the conflict between Russia and Ukraine.
Unprecedented rise in gasoline prices
Since the United States and Israel attacked Iran in late February, AAA data shows gasoline prices surged by more than 30%.
“The prices of gasoline and diesel continue to soar to multi-year highs as the effective closure of the Strait of Hormuz reduces the flow of millions of barrels of crude oil each day,” said Patrick De Haan, head of petroleum analysis at GasBuddy, in a report on Monday.
“The situation remains very volatile and unpredictable, but the upward pressure on fuel prices is expected to persist as long as the global oil supply is constrained by the ongoing disruption in the strait,” De Haan added.
The national average gasoline price is expected to surpass $4 per gallon, De Haan noted.
Moreover, diesel prices could approach $6 per gallon and potentially reach historic levels if the current situation does not improve.
Americans have already spent nearly $8 billion more on gasoline in the last month, a trend that poses increasing risks to the broader economy, while the surge in diesel prices could reignite inflation.
Geopolitical turmoil pushes up prices further
Fuel prices in the United States surged after West Texas Intermediate (WTI) crude surpassed $100 at the end of last week and remained in the triple digits.
At the time of writing, the WTI May contract on the New York Mercantile Exchange rose by 1.8% to $104.78 per barrel.
This surge coincided with President Donald Trump’s aggressive weekend threat towards Iran, promising to destroy all of their power plants, oil wells, and refineries, following reports of an Iranian attack on a fully loaded Kuwaiti supertanker anchored in Dubai that sparked a fire.
The Kuwaiti national oil company confirmed the ship was fully loaded at the time of the attack.
Diesel costs and broader economic implications
Meanwhile, the price of diesel, a crucial fuel for the U.S. transportation sector (trucks and freight trains), surpassed $5 per gallon on March 17.
This current level represents an increase of over 40% compared to pre-conflict levels, a rise that has broad repercussions for the economy.
The most frequently reported diesel price in the U.S. remained at $4.99 per gallon on Monday, showing no change from the previous week, according to GasBuddy data.
The diesel price varies significantly nationwide, with the top 10% priciest stations averaging $6.30 per gallon, compared to $4.51 per gallon at the cheapest 10%.
The average price for a gallon of diesel in the U.S. currently stands at $5.25, which is an increase of 26 cents from the previous week but is still around 12 cents below the national average fuel price, as reported by GasBuddy.
