US gas prices this month are so far the highest ever recorded for August as peace talks between the US and Iran have stalled and Donald Trump launched fresh threats against Oman.
The national average price of gas was $4.06 per gallon on Monday, according to data from AAA, $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.
Energy prices have been high since the US-Israel war with Iran began at the end of February and the strait of Hormuz, a crucial waterway through which a fifth of the oil passes, was blocked.
Brent crude, the global oil benchmark, reached $112 a barrel in March, a high not seen since 2022. While prices have since come down closer to $85 a barrel, they are still about 30% higher than a year ago.
Gas prices dipped over the last few months after the US and Iran reached brief peace deals, but have started to climb back upwards as peace talks falter.
On Monday, the US and Iran missed their 60-day diplomatic deadline to end the war, as both countries failed to reach an agreement on Iran’s nuclear program. Trump on Monday threatened to bomb Oman, a key strategic partner for the US 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 the war to end without Iran meeting his demands: “I have no time schedule. I’m not in a hurry,” he told Fox News on Monday.
Over the past sixth months of war, Americans have shelled out an excess of $56.4bn in elevated gas prices – or $477 more per household – the congressional Joint Economic Committee, a bipartisan committee that sourced data from AAA, reported in July.
Though overall inflation came down in July, driven by a cooling of energy prices, consumer prices are still up compared with last year. Half of Americans surveyed by Harris Poll in May reported struggling with the cost of groceries and gas, and an overwhelming majority said they believed that the US was in an affordability crisis.
Meanwhile, oil companies have amassed windfall profits amid 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 March and June, the first full financial quarter since the war began. That’s about $700,000 of profit every minute over the spring quarter.
