Diesel prices in the United States are rising much faster than gasoline as tensions and conflict involving Iran disrupt key global oil supplies. While most American drivers do not rely on diesel for their personal vehicles, economists warn the spike could have a broader impact on household budgets.
According to AAA, the national average price for diesel reached $4.78 per gallon on Tuesday. That represents a sharp 27% increase since the joint US-Israeli air strikes on Iran on Feb. 28. By comparison, the average price for gasoline stood at $3.54 per gallon on the same day.
Although the rise may not immediately affect everyday drivers, experts say diesel plays a central role in transportation and logistics, meaning the impact could spread across nearly every sector of the economy.
“Everything that winds up in a grocery store or everything that winds up at your retail store of choice, all of that stuff, it gets transported there and diesel is such an important part of those transportation networks,” Jeff Krimmel, founder of Krimmel Strategy Group.
“These increased diesel costs spread across the whole economy and end up suppressing economic growth in ways that people might not immediately connect back to the cost of freight and transportation.”
Truckers often pass higher fuel costs along to retailers and restaurants, which eventually transfer part of those increases to consumers. As a result, Americans could soon see higher prices on a wide range of goods, including groceries, clothing, electronics, appliances and home improvement items.
Krimmel also warned the surge could affect the housing market, since rising prices for furniture and home appliances could discourage potential buyers.
The price jump is closely tied to global supply concerns. Tehran has cut off access to the Strait of Hormuz, a key maritime route that transports roughly 20% of the world’s oil supply. The disruption pushed West Texas Intermediate crude oil and Brent crude above $100 earlier in the week, though both benchmarks later dropped to $83.34 and $84.79.
At the same time, the United States had already been experiencing tighter diesel supplies due to an unusually cold winter in the Northeast, which boosted demand for heating oil. Heating oil is chemically similar to diesel, further straining availability.
“When gasoline prices jump, that demand is more elastic, so people will stop driving as much, they’ll start carpooling,” Krimmel told The Post.
With diesel, however, the situation is different. “So much of the economy depends on what’s happening in freight transportation and there’s contractual agreements in place where goods are going to move from one place to another and the diesel costs are what the diesel costs are,” he continued.
Economists warn that sustained increases in energy prices could trigger broader inflation and slow economic growth. The combination, sometimes called stagflation, could complicate the Federal Reserve’s efforts to lower interest rates.
Major shipping and logistics companies are already responding. Large firms such as UPS have begun increasing weekly fuel surcharges, while smaller trucking companies may struggle to raise prices without losing business.
Farmers may also face growing pressure. Diesel fuels tractors, combines and other heavy equipment, and the price surge arrives just as the critical spring planting season approaches. Many farmers are already dealing with higher costs for machinery and fertiliser, making the increase even more challenging as prices for crops like corn, wheat and soybeans continue to climb.
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