The national average price of gas in the US reached $4.06 per gallon on Monday, marking the highest ever recorded for August, according to data from AAA. This is $0.05 higher than last week and $1 more expensive than a year ago. In California and Hawaii, averages hit about $5.50 a gallon.
Record August Prices Amid Stalled Diplomacy
The surge comes as peace talks between the US and Iran have stalled, and Donald Trump issued fresh threats against Oman. Energy prices have been elevated since the US-Israel war with Iran began at the end of February, which led to the blocking of the Strait of Hormuz, a crucial waterway through which a fifth of the world's oil passes.
Brent crude, the global oil benchmark, reached $112 a barrel in March, a high not seen since 2022. While prices have since fallen to around $85 a barrel, they remain about 30% higher than a year ago.
Impact on Households and Inflation
Gas prices dipped in recent months after brief peace deals between the US and Iran, but have started to climb again as negotiations falter. On Monday, the US and Iran missed their 60-day diplomatic deadline to end the war, failing to reach an agreement on Iran's nuclear program. Trump threatened to bomb Oman, a key US strategic partner that has historically served as a backchannel between the two countries, if it "gets in the way."
Trump also indicated he was not pressing for a quick end to the war, telling Fox News on Monday, "I have no time schedule. I'm not in a hurry."
Over the past six months of war, Americans have spent an excess of $56.4bn in elevated gas prices – or $477 more per household – according to a July report from the congressional Joint Economic Committee, a bipartisan panel that sourced data from AAA.
Consumer Struggles and Oil Profits
Although overall inflation came down in July, driven by a cooling of energy prices, consumer prices remain higher than a year ago. A Harris Poll survey in May found that half of Americans reported struggling with the cost of groceries and gas, and an overwhelming majority believed the US was in an affordability crisis.
Meanwhile, oil companies have reaped windfall profits during the war. Eight of the biggest oil companies – Aramco, BP, Shell, Equinor, TotalEnergies, Eni, Chevron and ExxonMobil – amassed $90bn (£67bn) in profits in the three-month period from March to June, the first full financial quarter since the war began. That equates to about $700,000 of profit every minute over the spring quarter.
