Diesel prices reached record highs over the past week, threatening an already-strained supply chain that is heavily reliant on the fuel for freight trucking with prices that are nearly double last year's averages. The average cost of diesel fuel in the United States now sits at $5.37 per gallon, AAA says. Unlike gasoline prices, whose lunar trajectories have plateaued since spiking after Russia's invasion of Ukraine, diesel costs may continue to rise.
Truckers are already concerned about growing, uncompensated costs that have the potential to drive smaller owner-operators out of business. Average retail prices for diesel topped $5.00/gallon just last week — the highest in records going back to 2005 — and have crept up more than 4% since. Prices jumped in recent days amid record futures contracts and decades-low stockpiles, further squeezing consumers dealing with soaring inflation. Russia’s invasion of Ukraine has tightened global supplies of the fuel and led to fierce competition for diesel produced on the U.S. Gulf Coast.
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Expensive diesel will deal a blow to the already-strained trucking sector, which consumes around 70% of all diesel used in the country and serves as a barometer of the U.S. economy, according to trucking association ATA. Diesel is also used in farming equipment currently powering the largest planting season for corn and soybeans since 2017.
The shortage is most pronounced on the East Coast, where distillates inventories have fallen to their lowest since 1996, Bloomberg reports. Producers on the Gulf Coast have sped up exports to Latin America and Europe to offset resources lost to embargoes on Russian oil production, leaving the domestic pipeline supplying states along the Atlantic coast underutilized.