Under the shadow of the Strait of Hormuz, fuel prices in the United States hit a record high during Labor Day.

With Labor Day approaching on September 7, American consumers are facing the highest gasoline prices ever recorded for the holiday.

Data from the American Automobile Association (AAA) shows that as of September 5, the national average price of regular gasoline was about $4.15 per gallon, nearly $1 higher than the same period last year, and significantly higher than the record of $3.82 set on Labor Day in 2012.

Behind this round of oil price increases lies a dual pressure on the supply side. The ongoing situation in the Middle East continues to disrupt crude oil transportation expectations, while damage to Russian refining capacity further tightens the supply of refined oil products. Even with emergency supply-side measures implemented by the US government, gasoline inventories remain at low levels, and market supply pressure has not yet eased significantly.

High oil prices are also being passed on to broader travel costs. AAA booking data shows that the average price of a round-trip domestic flight in the US during the Labor Day holiday was about $750, up 2% year-on-year; the average price of popular domestic routes was about $800, an increase of nearly 20%. From gas stations to airports, tightening energy supplies are gradually pushing up holiday travel costs for American consumers.

The situation in the Middle East, coupled with damage to Russian refineries, has led to a tightening of refined oil product supplies.

The core issue behind this round of oil price increases remains on the supply side.

On the one hand, the ongoing conflict in the Middle East continues to disrupt global oil shipping expectations. Following the renewed fighting between the US and Iran, the market has refocused on shipping safety in the Strait of Hormuz, and international oil prices have climbed back above $90 per barrel this week. US Energy Secretary Chris Wright stated that approximately 17 million barrels of crude oil passed through the Strait of Hormuz on August 31, the highest single-day level since the conflict began, but the threats to commercial shipping have not subsided.

On the other hand, damage to Russian refining capacity is further tightening global refined product supplies. GasBuddy analyst Patrick De Haan said that as some crude oil transportation resumes, the continued damage to Russian refining capacity is becoming an increasingly important factor supporting gasoline and diesel prices. Until refinery supplies recover, US refined product prices will still face upward pressure.

Despite supply pressures, U.S. refineries are operating at near full capacity, but the gasoline market remains tight. Data from the U.S. Energy Information Administration (EIA) shows that as of the week ending August 28, U.S. refinery utilization rose to 98%, the highest level since August 2018, but gasoline inventories remained below the seasonal average.

Despite a series of supply-increasing measures being implemented, the US gasoline market remains tight.

Faced with oil price pressures, the U.S. government is increasing supply from both the transportation and environmental policy ends.

Trump extended the Jones Act exemption for 90 days to November 15, allowing foreign vessels to carry fuel and other cargo between domestic ports when there is a shortage of qualified U.S. vessels. The U.S. Environmental Protection Agency also terminated the summer gasoline formulation requirements ahead of schedule, implementing an emergency exemption effective September 1 to increase the market supply of gasoline.

However, the easing of policies has not yet significantly alleviated inventory pressure. Last week, U.S. gasoline inventories decreased by 1.2 million barrels to 205.7 million barrels, about 6% lower than the five-year average for the same period, indicating that the U.S. gasoline market remains tight in the short term.

Regional market price disparities are also significant. AAA data shows that on September 5th, California had the highest average price for regular gasoline at $5.83 per gallon, followed by Washington at $5.50 and Hawaii at $5.40; Oregon, Alaska, and Nevada also had prices close to or exceeding $4.90. In contrast, Indiana's average price was only $3.43, Texas's was $3.67, and Oklahoma and Mississippi were slightly above $3.70.

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