U.S. drivers pay the highest gas prices in four years this Memorial Day
U.S. drivers will pay gas prices near four-year highs when fueling up to travel over the long Memorial Day weekend, and they should expect more shortages at the pump this summer unless the Strait of Hormuz reopens.
According to AAA, the average gas price was $4.55 per gallon on Friday; This is up more than 50 percent since the United States and Israel began war with Iran on February 28. This was the highest amount drivers paid on the Friday before Memorial Day since 2022, following Russia’s full-scale invasion of Ukraine.
Prices are down slightly from Thursday, when drivers paid the highest on average since July 2022.
Pump prices also rose as US crude oil prices rose more than 40% from pre-war levels due to Iran’s blockade of the Strait of Hormuz. The Bosphorus connects major producers in the Persian Gulf to global markets, making it the world’s most important oil export route. Its closure triggered the largest disruption to oil supplies in history.
Patrick De Haan, head of oil analysis at GasBuddy, said gas prices could rise to $5 per gallon in June if Hormuz remains closed.
Oil prices fell nearly 7 percent ahead of the holiday this week after President Donald Trump said he was canceling strikes on Iran to allow more time for negotiations. But Trump has repeatedly promised that the war will end quickly, but that tensions with Iran will escalate and oil prices will rise again.
“The president is implying there’s been a lot of progress, but I don’t know how many more head frauds we’re going to see,” De Haan said.
De Haan said the market needs to see verifiable and definitive steps being taken to reopen Hormuz before the prospect of $5 gasoline is off the table. Even if Hormuz reopens, prices at the pump likely won’t fully return to normal until 2027, the analyst said.
Trump told reporters on Tuesday that he wasn’t considering Americans’ finances “one bit” as he tried to negotiate a deal with Iran.
“I don’t think about the financial situation of Americans,” Trump said. “I’m not thinking about anyone. I’m thinking about only one thing: We can’t let Iran have nuclear weapons.”
David Goldwyn, who served as the State Department’s special envoy and coordinator for international energy affairs from 2009 to 2011, said global oil inventories are rapidly dwindling with only four to six weeks left before gasoline, diesel and jet fuel prices rise as buffers run out.
Analysts say the United States is protected from the real threat of physical fuel shortages because of its strong domestic production and strategic reserves. But Goldwyn said Asia and Europe are competing for U.S. crude and refined product exports due to loss of supply from the Middle East. This competition will put upward pressure on U.S. domestic prices, Goldwyn said.
“The reason we’re looking at $5 gasoline — we’re probably already looking at $6 diesel, but maybe we’re looking at $7 diesel — is because of global competition for products,” Goldwyn said.
