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The price of diesel fuel hit a record Friday due to refinery disruptions caused by the wars in Ukraine and Iran. Truckers in the U.S. are paying an average of $5.85 per gallon, a nearly 60% increase from last year's $3.71. In California, diesel costs $7.70 per gallon, $2 more than the national average.
Experts note that diesel prices directly contribute to inflation, as it powers essential transportation and industrial uses. John Kilduff, partner at Again Capital, explained that diesel is deeply embedded in the economy, affecting goods delivered by truck. Bob McNally, founder of Rapidan Energy, highlighted diesel's critical role in transportation, heating, agriculture, and industry.
The wars have shut down refineries, reducing global supply by about 5 million barrels per day. Ukraine's attacks on Russian refineries and Iran's attacks on tankers in the Strait of Hormuz have further disrupted production. Russia's diesel export ban affects 800,000 barrels per day, while disruptions in the Strait of Hormuz have impacted 1.2 million barrels per day.
Iran's Houthi allies also knocked out Saudi Arabia's Jizan refinery, reducing output by 200,000 barrels per day. Andy Lipow, president of Lipow Oil Associates, described diesel as a 'stealth tax,' with higher fuel costs passed on to consumers through increased prices for goods and services delivered by truck and rail.
Source: CNBC
