Diesel prices hit record $6 a gallon

The average U.S. diesel price has reached $6 a gallon for the first time, setting a record for a fuel that powers trucking, farming, rail, construction and much of the movement of goods across the economy.

AAA data showed the national average at $6.05 a gallon Friday morning, NBC News reported. A day earlier, CBS News reported that AAA had diesel at $5.98, up 61% from $3.71 a year earlier, while GasBuddy’s real-time tracker already showed diesel above $6. The national average for regular gasoline was about $4.29 Friday, up 15 cents from the previous week, according to AAA data cited by NBC News; CBS reported gasoline hovering above $4.28.

Economists and energy analysts said the jump is likely to reach consumers through higher costs for shipping, food and other goods if prices remain elevated.

“The cost of diesel gets into just about everything,” KPMG chief economist Diane Swonk told NBC News. “From running a farm… [to the] cost of food, but also everything across the economy that’s shipped.” When diesel prices rise, she said, everything “gets that extra fee tacked onto it.”

Swonk predicted diesel would remain an “inflationary problem” for months. Joseph Brusuelas, chief economist at RSM, told NBC News that “consumers should be prepared to pay higher inflation for anything that requires being shipped.”

The price surge has accelerated since the war with Iran began in late February, with NBC News reporting that the nationwide average diesel price has climbed 60% since then. CBS News cited Patrick De Haan, a petroleum expert at GasBuddy, as saying the ongoing war in Iran has crimped global oil supply. Brent crude, the international benchmark, rose Thursday to $108 a barrel as fighting between the U.S. and Iran escalated, CBS reported. NBC News reported that U.S. crude oil has risen more than 25% over the past month.

Diesel has risen faster than gasoline because of refining constraints, analysts said. Key refineries have been knocked offline or destroyed in Eastern Europe, where the Ukraine-Russia war continues, and in the Middle East, NBC News reported. CBS said Ukrainian drone strikes on Russia’s energy infrastructure have sharply reduced the country’s ability to refine oil. The Atlantic Council said Ukraine has significantly stepped up drone strikes on Russian refineries since the start of the year, contributing to a fuel shortage.

Russia is normally one of the world’s largest diesel exporters, behind only the United States, NBC News reported. Damage from Ukrainian drones forced the Kremlin to impose a sweeping diesel export ban in July that will remain at least through the end of September, according to NBC.

“There’s just not enough diesel right now in Russia to export any volume of it, and that’s unfortunately a big problem for a global economy that sees almost every piece of heavy machinery needing diesel,” De Haan told CBS News.

The pressure is already visible in wholesale prices. The Labor Department said Thursday that more than a third of the August increase in goods prices for producers was attributable to diesel, which rose 24.1% last month, CBS reported.

Grocery prices could be especially exposed. Brusuelas told NBC that supermarkets are already operating on thin margins because of high beef costs. David Ortega, a food economist at Michigan State University, told CBS News that refrigerated foods shipped long distances, such as seafood and fresh produce, are most vulnerable, while nonperishable and locally sourced products are more insulated.

Farmers are also feeling the strain. “It’ll push me right to the edge,” said Mark Mueller, a fourth-generation Iowa farmer who chairs the Iowa Corn Growers Association. “If I don’t get pushed over the edge by diesel fuel prices, higher fertilizer prices will push me over the edge because a lot of petroleum goes into fertilizer prices, as well.”

Mueller added: “I just see economic carnage the longer this war goes on.”