The average US diesel price rose to $6.16 a gallon on September 12, surpassing $6 for the first time and reaching an all-time high, according to data from the American Automobile Association (AAA), adding to the costs of transporting and producing food and consumer goods.
The average diesel price was $3.70 a gallon a year earlier, representing an increase of nearly 66%, while regular gasoline reached $4.31 a gallon. Higher fuel costs are rippling through trucking, agriculture, construction and manufacturing at every stage of the supply chain, from fields and factories to distribution centers and stores.
Patrick De Haan, an analyst at GasBuddy, said 47 of the 50 states had recorded an increase of more than $2 a gallon in average diesel prices over the year. He estimated that the US economy was bearing about $300 million a day in additional diesel costs.
Pressure on food and goods
Kroger Chief Executive Greg Foran said during the retailer’s earnings announcement that price pressures were likely to intensify, as the group sought to limit the extent to which higher costs were passed on to consumers.
Kroger reported operating profit of $971 million in the second quarter, according to results released on September 11, while lowering its forecast for annual growth in comparable sales, excluding fuel.
Mark Hall, chief financial officer of Smithfield Foods, said the impact of higher costs had begun to flow through to the company’s business during the second half of the year. Jeffrey Ettinger, interim chief executive of Hormel Foods, said the Iran war and the jump in diesel prices had become challenges facing the company.
Newell Brands, which owns brands including Rubbermaid, Sharpie and Coleman, said the impact of energy-cost inflation had exceeded its previous estimates, both through oil-linked raw-material prices and the direct cost of transporting goods using diesel.
Fuel adds to inflationary pressures
The US consumer price index rose 0.4% in August from the previous month, while annual inflation held at 3.4%, according to data from the US Bureau of Labor Statistics. The energy price index rose 2.1% during the month, while gasoline prices jumped 3.9%, accounting for more than one-third of the monthly increase in inflation.
Year on year, energy prices rose 16.3% and food prices increased 2.7%. The producer price index also rose 0.4% in August and 5.4% year on year, while diesel fuel prices jumped 24.1% in a single month and accounted for about two-thirds of the increase in prices for manufactured goods used as intermediate inputs, according to the Bureau of Labor Statistics.
Limited inventories and supply disruptions
The US Energy Information Administration expects distillate inventories, which include diesel, to fall below 100 million barrels and remain below the five-year average’s lower bound for most of 2027. Inventories stood at 106.3 million barrels in the week ending September 4, down from 107.2 million barrels at the end of July.
The agency expects the average retail diesel price to reach $5.55 a gallon in the fourth quarter of 2026 before falling to an average of $4.40 in 2027. It also expects seasonal pressure to increase in the autumn as refineries undergo maintenance and agricultural demand for diesel rises during the harvest season.
The price increase came amid disruptions following the US-Iran war and the interruption of oil and refined-product flows through the Strait of Hormuz. The Energy Information Administration said disruptions in the strait had pushed crude prices to higher and more volatile levels and prompted international buyers to seek alternative fuel sources.
US exports of distillates averaged 1.56 million barrels a day in the second quarter, up 30% from the five-year average. Jet-fuel exports nearly doubled from the average for the same period as shortages in global refined-product markets intensified.
