Prediction markets and AAA data indicate that gas prices will likely stay above $4 per gallon on Election Day, November 3, with traders on Kalshi assigning an 87% chance of prices remaining above that threshold. As of Thursday, the national average for gas stood at $4.36 per gallon, down from a peak of $4.56 per gallon in late May following geopolitical tensions linked to the war in Iran and the closure of the Strait of Hormuz. Prices briefly dipped to $3.79 per gallon in early July before rising again through the summer.
Diesel prices have also remained elevated, reaching a peak of $6.53 per gallon on September 22 and standing at $6.28 per gallon as of the latest data. Traders on Kalshi estimate a 68% chance that diesel prices will stay above $6 per gallon on Election Day. Rising diesel costs disproportionately affect states with larger agriculture industries, such as Iowa and Kansas, as well as states like Alaska, which rely on diesel for electricity. These states are also home to competitive U.S. Senate races this November.
The persistence of high fuel prices has coincided with Democrats gaining improved odds of flipping the U.S. Senate, with traders on Kalshi giving the party a 63% chance of taking control of the upper chamber from Republicans.
Political Responses to Rising Costs
Democrats emphasize affordability as a central campaign issue ahead of the 2026 midterm elections. Their proposals include $1 trillion toward new housing supply, government-produced prescription drugs, federal utility-rate standards, and limits on childcare costs. Additional ideas under discussion include expanded healthcare subsidies and increased government assistance for families. Some of these proposals, such as cutting zoning and permitting restrictions to boost housing supply, have been framed as addressing underlying structural issues that contribute to high costs.
Critics of Democratic proposals argue that many affordability measures rely on government intervention to offset costs rather than reducing prices directly. A financial advisor cited in one analysis questioned whether such policies lower actual costs or merely shift the burden to taxpayers or other segments of the economy. The critique suggests that policies like expanded subsidies or utility-rate standards may not address the root causes of inflation but instead redistribute costs without achieving long-term affordability.
Polling data reflects voter dissatisfaction with inflation management, regardless of which party is in power. A RealClearPolitics polling average shows that President Donald Trump’s job approval rating on inflation stands at 27.3%, with 69.3% disapproving. This reflects ongoing concerns about affordability despite some progress on certain fronts. Democrats, meanwhile, have positioned affordability as a key contrast point in their messaging, arguing that their policies will provide relief where previous approaches have fallen short.
Geopolitical and Economic Factors Driving Prices
The volatility in fuel prices has been closely tied to geopolitical developments, particularly the war in Iran and its impact on global oil markets. The closure of the Strait of Hormuz, a critical passageway for Middle Eastern oil exports, contributed to an initial spike in prices in March. While prices later eased, they have remained elevated due to ongoing supply chain uncertainties and regional instability.
Regional disparities in fuel costs also play a role in the political implications of high prices. States with heavy reliance on diesel for agriculture or electricity, such as Iowa, Kansas, and Alaska, face disproportionate economic strain. These states are also battlegrounds in competitive Senate races, where the economic impact of fuel prices could influence voter sentiment.
Prediction markets, which have a commercial relationship with CNBC, provide a data-driven lens into expectations for fuel prices. Their projections suggest that while there is a possibility of modest declines, prices are unlikely to return to pre-crisis levels before Election Day. This outlook underscores the challenges policymakers face in addressing affordability ahead of the vote.