USA Diesel Hits Highest Since April

US diesel advanced to the highest price since hitting a peak in April during the initial phase of the US-Iran war, highlighting the inflationary pressures menacing the global economy as the conflict drags on.

The nationwide average retail price reached $5.688 a gallon on Tuesday, according to the American Automobile Association. That’s just a fraction below the April high, and not far off the record $5.816 recorded in mid-2022 during the energy crisis triggered by Russia’s invasion of Ukraine. 

Diesel is the lifeblood of the global economy, powering trucks, agriculture and construction, and spikes at the retail level affect industries as well as consumers. The fuel has been boosted this year by the conflict in the Middle East, as well as the Russia-Ukraine war. Moscow — typically a major supplier — has curbed exports following waves of attacks on its refineries.

Earlier this week, President Donald Trump pressed US oil refiners to boost domestic production of diesel and gasoline during a closed-door meeting, as he contends with mounting cost-of-living concerns before November’s midterm elections. Trump made clear he wants lower prices at the pump for Americans, and asked executives how to increase capacity, according to a White House official who provided details on condition of anonymity.

Goldman Sachs Group Inc. is among the banks warning of tightness in the diesel market, highlighting attacks on refineries in the Middle East and Russia that have depleted global capacity. As energy prices advance, “diesel remains at the epicenter of the rally,” the bank’s analysts said last week.

With diesel-making margins sitting close to an all-time high, US refiners are running near maximum capacity. It may still not be enough. US supplies are the lowest ever for this time of year. In the northern hemisphere, harvests are beginning and heating season is just around the corner.

If high diesel prices persist into the fall, they will also weigh on the small but not insignificant portion of Americans who warm their homes with heating oil, which is effectively interchangeable with diesel. No state has a higher proportion of residences heated with oil than Maine, which is home to one of the nation’s most hotly contested Senate elections this fall.

The national average diesel price has never risen above $5.82 a gallon, according to the American Automobile Association. That mark was set in June 2022 amid the heights of the energy crisis triggered by Russia’s invasion of Ukraine.