Diesel Prices Surge Toward Record, Threatening Higher Food Costs

Diesel prices could reach an all-time high by the weekend, threatening more trouble for the American economy.The national average price of diesel reached $5.79 a gallon on Thursday — up more than 10 cents in a single day, according to fuel price monitoring platform GasBuddy. The price is less than 2 cents below the all-time record of $5.81 set in June 2022. The firm’s head of petroleum analysis, Patrick DeHann, said he expected the price to break the record by Friday.Canada, on Wednesday, hit its own record high price for diesel, according to GasBuddy. Canada has temporarily extended a cut in its excise tax to lower pump prices.Diesel prices have a major impact on trucking and farming, which can lead to higher prices for consumers. September is the start of the peak season for diesel demand as the fall harvest season begins.Penn State researchers say the higher diesel costs can add thousands of dollars in costs to farmers. They say if diesel costs $3 per gallon and a farm requires 3 gallons per acre for planting and harvesting, the fuel cost amounts to $9 per acre. At a price of $6 per gallon, this cost doubles to $18 per acre.As diesel prices rise, so do the costs associated with hauling crops to market, creating a double-whammy for food prices.The United States Energy Information Administration says that about 42 percent of the cost of diesel is tied to crude oil. Due to continued volatility in the Strait of Hormuz because of the war with Iran, crude oil prices have surged to more than $90 per barrel.Ukrainian attacks on Russian fuel refineries have further disrupted global supply, putting pressure on prices. Russia — the world’s second-largest diesel exporter — has banned diesel exports until the end of September amid domestic supply concerns. China is limiting its diesel exports to ensure sufficient local supplies.Treasury Secretary Scott Bessent on Wednesday said America is going through an “energy shock” because of both conflicts but said prices will fall after the war with Iran is over.American diesel reserves are at record low levels for this time of year, the Energy Information Administration reported.Just 60 days before midterm elections, Democrats have been using the stubborn inflation rate as a campaign issue. “The pressure on the US President will only get greater in the days ahead to ‘do anything’ or ‘say anything’ to get the oil price down,” energy investor Eric Nuttall said in an X post.President Trump held a closed-door meeting this week with refiners and pressured them to boost production, Bloomberg reported. That may be difficult to do because most refineries are running near full capacity already, according to energy analysts at the bank ING.There hasn’t been a new refinery built in Louisiana since 1977. New projects would take years to construct and cost billions of dollars so there is no short-term solution to increase domestic refining.

Diesel Prices Surge Toward Record, Threatening Higher Food Costs

Diesel Prices Surge Toward Record, Threatening Higher Food Costs

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