U.S. gasoline and diesel prices rose on Thursday as ongoing conflicts involving Iran and Russia reduced global oil supply and refining capacity. The national average for gasoline reached $4.44 a gallon, a 7-cent increase overnight, while diesel rose to a record $6.40 a gallon. Patrick De Haan, a petroleum expert at GasBuddy, stated that fuel costs are likely to continue climbing due to geopolitical instability and limited refinery output.
The price increases follow several disruptions to the global energy infrastructure. These include Ukrainian drone strikes on Russian refineries, Houthi rebel attacks on the East-West pipeline in Saudi Arabia, and a power outage that briefly halted production at an ExxonMobil refinery near Chicago. Additionally, Russia has maintained a ban on diesel exports since July, further tightening global markets.
Market data from AAA and GasBuddy shows that fuel prices vary significantly by region. In California, diesel reached an average of $8.35 a gallon and gasoline exceeded $6.00, while Illinois gas prices averaged $4.78. Tom Kloza, chief energy adviser for Gulf Oil, noted that Brent crude was trading at approximately $103 a barrel on Thursday. Analysts reported that attacks on the Saudi pipeline alone removed 4 million barrels per day from the global market.
The impact extends to home heating and utility costs, particularly in the Northeast. Approximately 4 million households in that region use heating oil, a diesel derivative, to warm their homes. With prices hovering near $6.00 a gallon, a household consuming 1,000 gallons over the winter would face a total expense of $6,000. These costs will likely appear in monthly utility bills or as direct payments for fuel deliveries as temperatures drop.
The global refining shortage, estimated by Kloza at 3 million barrels of lost capacity out of a 100-million-barrel daily market, creates a persistent upward pressure on prices that is difficult to offset by simply driving less. While gasoline demand may fluctuate based on price, commercial diesel demand remains relatively inelastic. Patrick De Haan projected that gas prices could reach $4.50 and diesel could hit $6.60 as early as the upcoming weekend. No specific dates for price relief were reported, as regional officials stated the Saudi East-West pipeline could remain out of service for weeks.