By Janet H. Cho
With gas prices averaging a whisker below $4 a gallon nationwide on Tuesday, drivers are wondering how high prices can go.
Turns out, higher than you think.
Some drivers in California, which currently has the nation's highest average gas prices, are seeing record highs of nearly $7 a gallon.
The national average price for a gallon of unleaded was $3.983 on Wednesday, up $1.01 a gallon from last month's average of $2.975, according to AAA. Diesel prices are averaging $5.366 a gallon.
GasBuddy's live price-tracker, compiled from more than 12 million price reports from 150,000 gas stations, says the national average is $3.979 a gallon at 4 p.m. Eastern time. That's 99 cents higher than last month's average and 84 cents higher than a year ago, but still below the $5.034-per-gallon peak in June 2022.
Patrick De Haan, head of petroleum analysis at GasBuddy, says it's looking increasingly likely that the national average will reach $4 a gallon this week, for the first time since 2022. The persistent conflict between the U.S. and Iran means that "until the Strait of Hormuz is fully reopened and ships are able to move freely, there's a rising risk that prices could go higher" unless there is action to re-open the Strait completely, he said.
The five states with the highest average gas prices on Wednesday are: California ($5.831 a gallon); Hawaii ($5.320); Washington ($5.298); Oregon ($4.871); and Nevada ($4.831), according to AAA.
Seasonal factors, combined with ongoing supply concerns tied to the effectively closed Strait of Hormuz, have pushed both gasoline and diesel prices sharply higher. "There are few signs of stabilization so far, as global oil prices continue to climb, and early indications suggest consumers may begin to pull back in response to the rapid pace of increases," De Haan said.
Oil markets were under heavy pressure to start the week, with prices moving sharply lower on Monday after President Donald Trump said he would pause his threatened strikes on Iran's energy infrastructure for five days after "good and promising" talks with Tehran. Iran has disputed having had those talks.
"All eyes will now be on whether these talks materialize and lead to any de-escalation," De Haan wrote. "A reduction in tensions could ease concerns for disruptions through the Strait of Hormuz -- the critical chokepoint that carries roughly 20% of global oil flows. Any sign that transit risks are diminishing would likely put further downward pressure on prices."
"That said, volatility is likely to remain high. Traders will be weighing not only the credibility and duration of the pause, but also the risk that tensions could quickly re-escalate if negotiations falter, " he said. He expects the market to remain "highly reactive to headlines, " with geopolitical developments likely to overshadow underlying supply and demand fundamentals.
Valero Energy, a major refiner, closed its operation at Port Arthur, Texas, after a fire in a diesel processing unit on Monday. That shuts down 2% of the U.S. refining capacity and 14% of Valero's own capacity, Barron's reported.
De Haan said he is waiting to hear about damage assessments. "If this refinery sees a major multi-week outage, that would certainly be bad news for the refinery and for global prices," he said. "This may further put upward pressure on prices depending on how long product flows out of it are impacted."
Diesel fuel prices are surging to multi-year highs, with some markets nearing record territory, De Haan said. U.S. diesel prices are averaging about $4.99 a gallon, with prices at the top 10% of stations averaging $6.08 a gallon, per GasBuddy.
The states with the highest average diesel prices are California ($6.88 a gallon), Washington ($6.36), and Hawaii ($6.17).
Ride-sharing app Lyft is launching a 60-day program to help drivers coping with rising gas prices save up to 98 cents a gallon. Starting Friday, its Elite tier drivers can get another 2% cash back when they use their Lyft Direct debit cards to pay at the pump at eligible U.S. gas stations, for a total 12% cash back for Elite members.
Platinum tier members, who currently get 7% cash back, and Gold members, who get 3% cash back, will both get another 1% during the promotion, which runs through May 26. Lyft drivers already get 1% cash back at Mastercard Easy Savings gas stations, as well as 14 cents a gallon cash back through the Upside rewards program, where eligible.
"Drivers are at the heart of Lyft," the company said. "We know our success is only possible because of the drivers who choose to use Lyft every day. Gas prices have jumped significantly in the past few weeks, and we know that hits hardest for drivers who depend on driving for their income."
DoorDash on Monday began offering its drivers 10% cash back on gas purchases using its Crimson Visa debit cards, up from the usual 2% discount. It is also giving eligible drivers who drive 125 or more miles for deliveries a weekly fuel relief payment of $5 to $15 a week (for those who drive 250 miles or more per week).
"Dashers could save an estimated $1 to $1.50 a gallon from weekly payments alone, depending on how many miles they dash," the company said.
Write to Janet H. Cho at janet.cho@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 25, 2026 16:33 ET (20:33 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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