President Trump took office with a pledge to lower energy prices for Americans, but fuel prices are now experiencing a historic increase.
According to Dow Jones market data firm OPIS, the average diesel price in the US reached 5.85 USD per gallon (1.55 USD per liter) on September 4. This is a new peak, surpassing the old record in 2022, when the Russia-Ukraine conflict caused the global energy market to stagger.
Americans preparing for the Labor Day holiday will also have to buy gasoline at the most expensive prices ever recorded for this time of year. That's about $4.15 a gallon ($1.10 a liter), $0.25 more than the same period last year.
Compared to gasoline, the increase in diesel prices is more worrying. This fuel is the lifeblood of the US economy. Trucks and trains use diesel to transport goods across the country. Farmers depend on this fuel to grow crops. When diesel prices increase, businesses have to pass the costs on to consumers, making them spend more money at the supermarket.
Food corporations J.M. Smucker and Campbell's recently said logistics costs are under greater inflationary pressure. In July, Democratic lawmakers said that during the planting season alone, farmers had to spend $1.4 billion more on diesel than last year.
"The US market is very scarce in supply. I don't think there is any way to prevent prolonged price pressure," said William O'Neil - analyst at S&P Global.
The closure of the Strait of Hormuz for months due to the Middle East conflict has limited the flow of crude oil to giant refineries in Asia. Iran's attacks also caused damage to major factories in the Middle East. Ukrainian drones also caused some oil refineries in Russia to close. Meanwhile, the US is exporting diesel to the world, thereby pushing up domestic prices.
The supply shortage occurs at a time when farmers are preparing to enter the harvest season. Many areas in the Northeastern United States are less than a month away from starting to use heating oil to keep warm. Meanwhile, some oil refineries are stopping production for routine maintenance, further tightening supply.
US oil and gas industry leaders have warned for months that the country is at risk of facing rising fuel prices. However, the White House considered these warnings too pessimistic, saying that the oil and gas industry had predicted that US oil prices could remain above 100 USD per barrel due to the closure of the Strait of Hormuz. However, in reality, the price only fluctuates around 80-90 USD, mainly because Mr. Trump convinced the market that the conflict is still under control.
Analysts say that besides banning diesel exports, the Trump administration has almost no other options to prevent prices from continuing to rise. Energy Secretary Chris Wright has repeatedly publicly rejected the idea of an export ban. On the WSJ, a White House official also recently said they currently have no such plans. However, record high energy prices may rekindle debates on this issue.
In the context of conflicts in many places, the world is looking to the US for more fuel supplies. According to the US Energy Information Administration (EIA), in the 4 weeks leading up to August 28, the US exported an average of 1.77 million barrels of diesel per day. This number is about 31% higher than the same period last year.
Diesel prices in the US have increased 56% since the Middle East war broke out. "The more money you have to spend on fuel, the less money you have left to pay your bills and make a profit at the end of the year," Scott Litchfield - a truck driver in Boston, told the WSJ.
The transportation company he consults for currently operates eight mid-sized trucks, each consuming 40-60 gallons of fuel per day. Litchfield estimates the company now has to spend an additional $480-640 per day on fuel and has increased service prices for some customers.
This week, Mr. Trump urged a group of oil refining industry leaders to do more to lower fuel prices, including building new refineries. However, businesses have operated factories at almost full capacity to maximize profits and are not interested in new projects worth billions of dollars.
High fuel prices have begun to affect some of America's largest food companies. J.M. leaders Smucker recently told analysts that the company is recording higher-than-expected inflation, partly due to transportation costs. Campbell's leaders also forecast a double-digit increase in logistics costs in fiscal year 2027.
Litchfield said he was "completely dissatisfied" with the government's decisions. "There is no reason for us to go to war in Iran," he complained.
