From The Conversation · Vidya Mani · · 3m
Why diesel prices are crushing the US economy
Wars in Ukraine and Iran have disrupted oil supplies, sending diesel costs soaring and rippling through food, trucking, transit and energy.
In brief
Wars in Ukraine and Iran have disrupted oil supplies, sending diesel costs soaring and rippling through food, trucking, transit and energy. Diesel powers essential infrastructure from farms to freight, so record-high prices cascade through the entire economy, affecting food costs, shipping, and heating. Originally…
Diesel powers everything
Diesel fuel runs long-haul trucks, freight trains, farm equipment, construction machinery, and backup generators. Its concentrated energy makes it ideal for heavy work in remote locations.
Prices hit record highs
On September 14, 2026, national average diesel hit $6.52 a gallon, up 74% from a year earlier. That's a jump of nearly $2.78 per gallon in just 12 months.
Two wars disrupted supply
The U.S. war with Iran and Russia's invasion of Ukraine have disrupted oil production and refinery output worldwide. Both conflicts have lasted long enough that companies have exhausted emergency supplies.
Hormuz strait nearly closed
The near-complete closure of the Strait of Hormuz has dramatically reduced global crude oil flow. Ukrainian attacks on Russian refineries have also restricted Russian diesel exports to world markets.
Farmers face tough choices
High diesel costs force farmers to restrict or postpone planting and harvesting, reducing food production. Higher fuel also increases processing and transportation costs for food reaching retail markets.
Trucking costs surge
A 20% increase in fuel costs translates to a 4% increase in trucking operating costs. Since trucking has thin profit margins, those costs get passed directly to consumers buying shipped goods.
Transit demand rises
High diesel prices increase bus and train fuel costs while expensive gas pushes more people toward public transit. Passengers save money sharing transit costs, but systems face higher operating expenses.
Heating oil gets pricier
Diesel is used for backup power generation and heating oil is produced through the same refining process. Crude oil shortages mean less heating oil available, driving up winter energy costs for consumers.
California pays way more
California's average diesel price topped $8 per gallon while the Gulf Coast paid $6.03. California has few pipeline connections to other refineries and must import crude from the Middle East.
Taxes add to the burden
Federal diesel tax is 24.4 cents per gallon. California adds 48.2 cents state tax plus 13% sales tax. Some states suspended fuel taxes but counties kept theirs, creating uneven relief.
Russia cuts diesel exports
Russia, the world's second-largest diesel exporter, suspended exports in July 2026 to fuel its military and domestic economy. U.S. producers now sell more diesel overseas, raising domestic prices.
Trump backs export ban
Some Republicans proposed banning U.S. diesel exports. President Trump supports the idea, which could lower prices near Gulf Coast refineries but risks filling storage tanks and cutting overall production.
Ban could backfire
A diesel export ban might offer short-term relief but could shift costs elsewhere. Without export outlets, refineries may reduce production of diesel, gasoline, jet fuel and heating oil simultaneously.
In short
Diesel powers essential infrastructure from farms to freight, so record-high prices cascade through the entire economy, affecting food costs, shipping, and heating.
