Michigan drivers are paying $1.13 a gallon more than a year ago as Middle East turmoil and tight global refinery capacity keep fuel prices elevated. A 15-gallon fill-up now costs nearly $64, adding another bread-and-butter issue for voters heading toward the November midterm elections.
LANSING — Michigan motorists are getting hammered at the gas pump again, with regular gasoline climbing to about $4.25 a gallon Monday — up 36% from a year ago — and raising an uncomfortable question as the Labor Day travel weekend approaches:
Could $5 gasoline be next?
AAA reported Monday that regular gasoline in Michigan averaged $4.254 a gallon, up from $4.136 a week ago — an increase of nearly 12 cents in seven days.
A year ago, Michigan gasoline averaged about $3.12 a gallon.
That means motorists are now paying about $1.13 more for every gallon they buy than they did a year ago.
Michigan’s average is also about 19 cents higher than the national average of $4.064.
A 15-gallon fill-up now costs nearly $64.
And unlike some previous gasoline spikes, the problem isn’t simply expensive crude oil.
Global refinery constraints, severely disrupted energy shipments through the Middle East and continuing geopolitical uncertainty are helping keep gasoline prices elevated even though crude oil has retreated considerably from its wartime highs.
$4.25 Gas Can Cost A Michigan Driver $600 More A Year
The difference between $3 gasoline and $4.25 gasoline becomes significant when spread across a year.
Consider a Michigan motorist who drives 12,000 miles annually in a vehicle averaging 25 miles per gallon.
That driver consumes about 480 gallons of gasoline a year.
At $3 a gallon, that fuel costs about $1,440 annually.
At $4.25, the annual bill jumps to about $2,040.
That’s an additional $600 a year coming out of the household budget.
For families with two vehicles, long commutes, pickup trucks or SUVs, the impact can easily be greater.
And money spent on gasoline isn’t available to spend at Michigan restaurants, retailers or other businesses — giving higher fuel prices an impact that extends well beyond the gas station.
Where Does Your $4.25 Gallon Of Michigan Gas Go?
The $4.25 motorists see displayed on a gasoline pump isn’t simply the cost of crude oil plus a gas station’s profit.
According to the U.S. Energy Information Administration, gasoline prices are broadly made up of four components: crude oil, refining, distribution and marketing, and taxes.
The exact percentages fluctuate with oil prices, refinery margins, transportation costs and market conditions.
But one part of the price Michigan motorists pay can be calculated precisely: taxes and government fees.
Taxes And Fees On Every Michigan Gallon
Tax Or Fee Cost Per Gallon Michigan motor-fuel tax 52.4¢ Michigan environmental regulatory fee 1.0¢ Federal gasoline tax/fee 18.4¢ Total taxes and fees 71.8¢
At a $4.254 pump price, taxes and government fees account for about 16.9% of the price of a gallon of regular gasoline in Michigan.
That leaves approximately $3.54 per gallon covering crude oil, refining, distribution and marketing, gas-station operating costs and margins throughout the gasoline supply chain.
Michigan’s Biggest Tax Goes Toward Transportation
Michigan substantially changed how motorists are taxed at the pump beginning Jan. 1, 2026.
The state eliminated the 6% sales tax on motor fuel and increased its dedicated motor-fuel tax to 52.4 cents per gallon.
That distinction is important.
Michigan’s motor-fuel-tax revenue is dedicated to transportation infrastructure and helps finance state and local roads, highways and bridges.
So while more than 50 cents of every gallon goes toward Michigan’s motor-fuel tax, those dollars are tied to the transportation system motorists use.
Is The Rest Gas-Station Profit?
No.
After subtracting Michigan and federal taxes and fees, the remaining $3.54 isn’t going into the pocket of the station owner.
It includes the cost of crude oil itself; the cost and margin involved in refining crude into gasoline; transportation from refineries to terminals and service stations; marketing; station operating expenses; and profits or losses throughout the gasoline supply chain.
Crude oil has historically been the largest component of gasoline prices, according to EIA.
But during the current energy shock, refining has become particularly important.
Why Isn’t Gas Falling Along With Oil?
Brent crude oil was trading around $88 a barrel Monday, while U.S. West Texas Intermediate crude was around $82.
Those prices have fallen considerably from peaks reached earlier during the conflict involving Iran.
Normally, falling crude prices eventually translate into cheaper gasoline.
But the world also has to turn that crude oil into gasoline.
And that’s where another bottleneck has developed.
Some Middle Eastern refining capacity remains below prewar levels, Russian refining has been damaged by Ukrainian attacks, while other international refinery and export constraints have tightened supplies of finished petroleum products.
The result is that motorists can continue paying high gasoline prices even when the underlying price of crude oil declines.
White House Wants U.S. Refineries To Produce More
The refinery problem has become serious enough that the Trump administration is turning its attention to U.S. fuel producers.
U.S. Energy Secretary Chris Wright said Monday he plans to speak with American refiners about whether they can increase production.
But there is a problem.
U.S. refineries are already operating at extremely high levels, encouraged in part by strong refining margins.
That leaves limited room to quickly produce substantially more gasoline and diesel without additional refinery capacity or reductions in maintenance and outages.
For motorists, that means increasing U.S. crude-oil production alone doesn’t necessarily produce cheaper gasoline.
Oil still has to be refined into the fuel drivers put in their tanks.
Strait Of Hormuz Remains The Biggest Wild Card
The biggest geopolitical threat to gasoline prices remains the Strait of Hormuz.
The narrow waterway connecting the Persian Gulf with the Arabian Sea normally handles roughly 20% of global petroleum-liquids consumption, according to EIA.
Shipping through the region has been severely disrupted during the conflict involving Iran.
Reuters reported Monday that only five vessels transited the strait Saturday and none Sunday, compared with 31 ships during the previous weekend.
Any renewed attacks on tankers, oil facilities or refineries could quickly send crude and refined-fuel prices higher again.
Conversely, a diplomatic breakthrough and restoration of normal shipping could remove substantial pressure from energy markets.
For Michigan motorists, events occurring thousands of miles away therefore remain directly connected to the price displayed at the neighborhood gas station.
$5.48 Diesel Could Hit Michigan Consumers Too
Gasoline gets most of the attention because motorists see the price every time they fill their vehicles.
But diesel may have broader implications for Michigan’s economy.
AAA reported Michigan diesel averaging about $5.48 a gallon Monday.
Trucks transport food, automotive components, construction materials, manufactured products and consumer goods across the state.
Businesses ultimately have to absorb those higher transportation costs or pass some of them along to customers.
That means today’s fuel-price shock could eventually contribute to higher prices elsewhere in Michigan’s economy.
Gas Prices Become A November Election Issue
The gasoline spike also arrives at a politically sensitive time, with Michigan voters heading to the polls Nov. 3 to choose a new governor, U.S. senator, members of Congress and state lawmakers.
Affordability — including the price of gasoline, groceries, electricity, housing and other everyday necessities — is becoming one of the defining bread-and-butter issues heading into the 2026 midterm elections.
A Reuters/Ipsos poll released this month found economic concerns weighing heavily on voters. Among registered voters, 37% said Democrats had the better approach to the economy, compared with 36% who favored Republicans — the first Democratic advantage on the question in roughly a decade.
The political significance of gasoline prices is particularly difficult to miss.
Unlike many economic statistics, motorists don’t have to wait for a government inflation report to discover gasoline has become more expensive.
They see the price in giant numbers every time they drive past a gas station.
The University of Michigan’s closely watched consumer sentiment index also fell to 51.0 in August from 55.2 in July, ending two consecutive months of improvement. The university reported particularly large declines among older and lower-income consumers — groups especially vulnerable to a loss of purchasing power from inflation.
With Michigan gasoline at $4.25 a gallon — 36% higher than a year ago — candidates from both parties will have to confront voter concerns about what it costs simply to drive to work, buy groceries and pay household bills.
Could Michigan Really Reach $5 Gas?
Michigan has been there before.
AAA says Michigan’s record statewide gasoline price was $5.223 a gallon on June 11, 2022, during the global energy shock following Russia’s invasion of Ukraine.
Today’s $4.25 average remains about 97 cents below that record and roughly 75 cents below the $5 threshold.
Reaching a $5 statewide average would probably require another significant disruption — such as escalation involving Iran, additional attacks on tankers or refineries, a major U.S. refinery outage or another substantial reduction in global fuel supplies.
But individual Michigan gas stations could cross $5 long before the statewide average.
And the household economics become painful quickly.
At $5 a gallon, a 15-gallon fill-up costs $75.
The Michigan driver traveling 12,000 miles annually at 25 mpg would spend about $2,400 a year on gasoline — $960 more than at $3 a gallon.
There is also a path toward lower prices.
If Middle East tensions ease, oil shipments through Hormuz normalize and refinery production increases, gasoline prices could retreat.
For now, however, Michigan motorists are absorbing another blow to household affordability.
At $4.25 a gallon, a routine 15-gallon fill-up is approaching $64. Gasoline costs 36% more than a year ago, diesel is approaching $5.50, and Michigan voters are heading toward November with another highly visible reminder that the cost of living remains one of the biggest issues confronting their household budgets.
