Gas at $4.34, Inflation at 3.7%: War-Driven Energy Costs Hit U.S. Consumers Before Midterms

American consumers are paying more for nearly everything they buy, and gasoline is the reason. The Bureau of Labor Statistics reported Wednesday that overall consumer prices rose 3.7 percent from a year ago and 0.6 percent from August alone — with gasoline accounting for more than half of that monthly jump, according to NBC News. The national average price of a gallon of gas now stands at $4.34, a level the country has sustained for 158 consecutive days, breaking a record set in 2022.

The root cause, according to reporting across outlets, is the war the United States and Israel launched against Iran in late February. That conflict has disrupted Middle Eastern oil supplies and pushed crude oil above $90 per barrel — up from roughly $80 in August and as high as $106 per barrel in recent weeks, according to NBC News. Because crude is the largest component of gasoline costs, those increases have flowed directly to the pump.

The BLS said the gasoline index rose 9.1 percent in September alone. Since the war began in late February, the price of unleaded gasoline has risen 45 to 46 percent, according to NBC News and Newsweek. Diesel has climbed even more sharply — up 70 percent over the same period, according to NBC News — hitting farmers, truckers, and the shipping industry particularly hard. The average price for a gallon of diesel on Tuesday was $6.27, according to Newsweek.

Absolutely stunning price spikes in wholesale diesel today; Up 18cts/gal Gulf Coast and East Coast; but up 28cts/gal in Southern California and 25-30cts/gal in Great Plains and Great Lakes. Market clearly not believing that Russian oil is on the way.— Tom Kloza, Chief Energy Advisor, Gulf Oil

Kloza added that Tuesday's diesel surge was 'not a normal day.' Patrick De Haan, head of petroleum analysis at GasBuddy, said 'truckers and farmers [are] not going to see any relief anytime soon,' according to Newsweek.

The broader inflation picture is being felt across the economy. Housing, clothing, and restaurant and takeout food all saw price increases in September, according to NBC News. Only three major categories — groceries, medical care commodities, and utility gas service — posted declines. Core inflation, which strips out food and energy, rose 2.6 percent year-over-year and 0.3 percent from August, also slightly above what economists polled by Dow Jones had forecast.

Wage growth has not kept pace. As of September, annual wage growth was running at 3 percent — below the 3.7 percent overall inflation rate. Paychecks have not grown faster than inflation since March, according to NBC News, meaning workers are effectively earning less in real terms with each passing month.

The timing is acutely political. Wednesday's CPI release is the final inflation report before the November midterm elections, in which Republicans are defending their majorities in the House and Senate. Polls consistently show inflation and the cost of living are top concerns for voters in both parties, according to NBC News. The surge in prices is a particular problem for President Trump, who made lower energy costs a centerpiece of his 2024 campaign and whose White House, as recently as last October, was touting his leadership as 'bringing relief at the gas pump' — when the national average was just over $3 a gallon, according to Newsweek.

Trump subsequently said gas prices would fall below $2 per gallon. Five months later, the average had climbed to nearly $4. It has risen further since, according to Newsweek.

President Trump remains committed to unleashing American energy dominance, cutting costs, and putting more money back in the pockets of hardworking American families. The President wants to see prices at the pump fall and continues to take historic measures to alleviate temporary disruptions as oil flowing through the Strait of Hormuz approaches pre-conflict levels. President Trump had the courage to do what his predecessors didn't to ensure the Iranian terrorist regime will never have a nuclear weapon.— Taylor Rogers, White House Spokeswoman

Researchers at Brown University's Watson School of International and Public Affairs calculated that gas prices have risen more than 46 percent since the war began, adding $73.5 billion in total costs — or an additional $561.20 per U.S. household, according to Newsweek.

California has the highest state average at $6.28 per gallon, with Oregon, Washington, Idaho, Alaska, Hawaii, Nevada, Utah, Illinois, and Arizona also among the most expensive markets. Prices are lowest in Indiana, Ohio, Tennessee, and several Southern states including Texas, according to Newsweek.

AAA noted in an October 8 release that this is the first year the national average has been above $4 per gallon in October, calling current prices 'the highest they've ever been for this time of year.' The all-time single-day record — $5.01 per gallon — was set in June 2022 and has not been broken; today's average of $4.34 remains roughly 65 cents below that peak, according to Newsweek.

Financial markets reacted sharply to Wednesday's data. Stock futures fell as traders reassessed the likelihood of a Federal Reserve interest rate hike sooner than previously expected. Before the report, market odds had pointed to December as the likely timing for the next hike; that calculus shifted after the release, according to NBC News. A rate increase would raise borrowing costs for mortgages, credit cards, personal loans, and vehicle loans — adding another layer of financial pressure on households already squeezed at the pump.

Despite the pressure, consumer spending has remained resilient. Bank of America CEO Brian Moynihan said Wednesday that customers were spending at a pace 5 percent higher than last year. Citigroup CEO Jane Fraser said Tuesday that 'the consumer is still driving much' of the economy's momentum, according to NBC News.

Whether gas prices ease before Election Day will depend largely on global oil markets and the trajectory of the Iran conflict. Some lawmakers have moved to temporarily suspend gas taxes to ease the burden on consumers, but the national average has continued to climb despite those efforts, according to Newsweek.

Why it matters — With real wages falling behind inflation for seven straight months and the Fed weighing another rate hike, rising gas prices are simultaneously squeezing household budgets, threatening to raise borrowing costs, and reshaping the political landscape three weeks before midterm elections that will determine control of Congress.

Reported by reuters.com, nbcnews.com, newsweek.com