The US national average diesel price reached a fresh record high of $6.2694 per gallon on Monday, marking a significant escalation from $6.2301 a day earlier and $5.9012 a week ago, according to AAA fuel price data. This represents a substantial increase from $5.8159 per gallon in June 2022, which was previously the all-time high, and $3.76 per gallon before the US-Israel war against Iran began this year. The fuel now costs roughly $2.50 more than it did a year ago, representing a substantial increase in fuel costs for American consumers and businesses. The national average is at its highest level this late in the calendar year, marking unprecedented territory for diesel pricing. As GasBuddy analyst Patrick De Haan noted on social media, "Every truck, every delivery, every package, every grocery run just got more expensive."
The latest diesel price surge represents a nearly 66% increase from $3.76 per gallon before the US-Israel war against Iran began this year, according to AAA data. The war has disrupted shipping through the Strait of Hormuz, which before the conflict carried roughly one-fifth of global oil supply. The market has been further squeezed by Russia's diesel export ban, imposed as several refineries remain idle following repeated Ukrainian drone attacks. Additionally, restrictions on Chinese fuel exports are another factor that further tightened global diesel supply. Brent crude has risen well above $90 per barrel compared with around $70 before the war, pushing crude oil prices sharply higher and tightening fuel supplies. U.S. diesel inventories stand 13% below their five-year average at 106.3 million barrels, as reported by the Energy Information Administration, with stocks rising last week as refiners ran plants at full tilt to capture strong margins.
American farmers are experiencing significant financial pressure as diesel prices hit record highs just as the corn and soybean harvest gets underway, according to The Times of India. The higher fuel costs are pushing up the cost of running combines, tractors and trucks during the critical harvesting period. "Those prices hurt," said Paul Mitchell, a professor of agricultural and applied economics at the University of Wisconsin-Madison, as reported by AP. "It's the hauling of everything, moving the grain or the silage from the field to the farm and then from the farm to wherever they're selling it." The rise has added to a difficult year for farmers already paying more for fertiliser, seeds, equipment, chemicals and other inputs, creating a cascading effect on agricultural operations.
The diesel price surge is creating significant cost increases for consumers through higher transportation and delivery fees. As reported by GasBuddy, "Record diesel prices will impact every cargo, shipment, every delivery Americans are taking, and are likely to reignite inflation up and down the supply chain." The U.S. diesel crack spread, a measure of refining margins, surged to a record high of $112.17 a barrel on Thursday, according to LSEG data. U.S. distillate inventories are near multi-decade lows for this time of year, even with refiners operating at high utilization rates, as noted by Linda Giesecke, director of refined products at Rapidan Energy. With global diesel supplies remaining tight, diesel margins are expected to stay elevated and volatile into early next year. Regular unleaded petrol also continued its climb, with the national average reaching $4.3289 a gallon on Monday, up from $4.0704 a month ago and $3.1777 a year ago.
The surge in diesel prices is creating significant political headaches for President Trump and Republican lawmakers as they seek to defend thin congressional majorities in November's midterm elections. A Reuters/Ipsos poll last month found Democrats held an eight-point advantage over Republicans on which party had the better approach to the cost of living. Trump acknowledged on Wednesday that relief from the oil-price surge may not come until after the election. The White House said Trump remained focused on expanding U.S. refining capacity and lowering energy costs, arguing that oil and gas prices would fall as the United States maintains control of the Strait of Hormuz. However, higher fuel and transportation costs could further stoke inflation ahead of the midterms, complicating Republican efforts to persuade voters that Trump's policies are improving affordability.
