That’s the new record high price of a gallon of diesel—a fuel that powers the economy and influences the cost of most goods that travel to store shelves by trucks, ships, and trains.
While the price of crude oil and related products has spiked since Russia invaded Ukraine, gasoline prices haven’t set any new records since mid-March, while the national average for a gallon of diesel reached another all-time high on Monday—the fourth straight record high in at least the 21 years of data provided by AAA. Both gasoline and diesel are refined from crude oil, but the cost of diesel is rising faster than gasoline in part because the supply of diesel hasn't risen as fast as the demand, said Philip Verleger, an independent economist focused on the energy sector.
For any industry reliant on diesel, the surge in price threatens to fuel inflation even more—and could ultimately be passed on to consumers. Besides the transportation sector, diesel also powers key machinery in the agricultural and construction sectors, helping keep farming and manufacturing operations moving forward, Craig Fuller, CEO of transportation information provider FreightWaves, wrote on the FreightWaves website Sunday.
“Since diesel powers the industrial economy, the recent surges in prices will put additional inflationary pressures on the U.S. economy–in the sectors that have already experienced unprecedented inflation–transportation, agriculture, and construction,” Fuller wrote.
And prices are likely to keep going up, Verleger said. It's hard for refiners to keep up with the demand because diesel has to meet government-mandated low-sulfur fuel requirements, he said. That’s become tougher given declines in the production of low-sulfur crude oil from Nigeria—a type of crude that’s ideal for making diesel fuel, he said.
“What happened is COVID cut demand for diesel so that we didn't have a problem in 2020, a problem in 2021, but now we do,” Verleger said. “It's a big deal. It’s very hard to fix it.”
Have a question, comment, or story to share? You can reach Terry at firstname.lastname@example.org.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!