Sept. 4 (UPI) — The price of diesel throughout the United States hit a new record-high Friday of $5.85 a gallon, according to the latest data from the American Automobile Association.
The increase in the national average price was almost 7 cents up from Thursday’s price of just over $5.78. Average petrol prices, by contrast, remained broadly flat at just under $4.15, up by just over a third of a cent, and well below the $5.01 per gallon record set in 2022.
The diesel price is up 55% from Feb. 27, the day before the conflict with Iran erupted, when it was $3.76 a gallon, and the petrol price is close to 40% higher.
Gas and diesel prices tracking firm GasBuddy said the cost of diesel was important because the fuel provided the energy running trains, tractors and trucks, the main drivers of the U.S. economy.
GasBuddy petroleum analyst Patrick De Haan told NPR that with diesel fueling the supply chain it was inevitable that when the price rose it would “trickle down.”
The impacts are wide reaching, risking pushing up farming costs because farm machinery runs on diesel, ultimately feeding through into food prices and pretty much every other consumer purchase because it’s all transported by diesel-powered trucks.
The finances of school districts are affected because most of the country’s 500,000 school buses have diesel engines.
Goldman Sachs wrote in a research note that price hikes for all the main refined petroleum products internationally had outstripped increases in the cost of crude oil, which is currently trading about 30% higher than before the war at $95 a barrel.
The upward pressure on prices was due to the fact that the initial supply disruption caused by Iran’s effective closure of the Strait of Hormuz, via which about 20% of the world’s crude oil is exported, is now affecting refineries.
In addition, refining capacity has been hit in Gulf countries and Russia by strikes by Iran and Ukrainian long-range drones, repectively.
ING said it did not anticipate any change for the better in the immediate future.
“With little spare refining capacity, meaningful relief requires a recovery in Persian Gulf and/or Russian flows,” commodities strategy head Warren Patterson said in a note.
Patterson said U.S. refineries were producing more fuels, an arbitrage strategy that exploits the gap between the price of crude and record high prices of refined products, a game plan that has enabled firms including Marathon and Velero turn record profits.
He said refining issue meant prices would likely remain disconnected from the cost of crude, meaning that high gas prices would persist even if the U.S.-Iran conflict ended.
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