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Diesel, the fuel used by truckers across the U.S., has seen its price soar in the past two months by more than $1.50, putting a strain on trucking companies and likely prolonging inflationary pressures on the economy.
The national average has climbed to $5.62 a gallon, the U.S. Energy Information Administration said. The amount marks the second straight week in which prices hit record highs. Diesel is up 76.5 percent from a year ago.
Jim Mitchell, Refinitiv’s head of America oil analysts, told Business Insider that the markets are telling us there’s a shortage for the fuel.
“This is a tailwind for inflation,” he said. “We’re demanding more diesel than anyone can supply.”
John Catsimatidis, the refinery and fuel magnate, told Bloomberg that he would not be surprised if diesel is rationed on the East Coast this summer. BI pointed out that the conditions are even worse in Europe, where prices have jumped 88 percent.
Europe has sanctions in place against Russia that are impacting energy prices. (See “BIDEN’S ‘HATE RUSSIA’ SANCTIONS CAMPAIGN INTENSIFIES,” “BIDEN BACKTRACK, SAYS SANCTIONS WERE NEVER MEANT TO PREVENT AN INVASION” and “POLISH PM ADMITS SANCTIONS AGAINST RUSSIA WERE A BUST.”)
Helge Ippendorf, chief executive of Via Logistik GmbH, a German shipping company, said he is paying 4,000 euros a week for diesel, The Wall Street Journal reported. He said the price is about 80 percent more than he was paying a year ago.
“No other impact in my whole career—and I started my own company in 1981—was as massive as the situation at the moment,” he said.
The Journal spoke with Jake Phipps, the CEO of a West Palm Beach, Fla., manufacturer of interior finishes for real-estate developers. He said his shipping costs this year are up 20 percent.
“It’s causing us to work more closely where a project is and what it takes to ship there,” he said. “We’re trying to use rail as much as we can, which saves a little bit. But that isn’t always possible. Otherwise, all we can do is pass the cost along to our customers.”
Retail unleaded gas prices have also jumped in the U.S. by about 35 percent to a national average of $4.43 a gallon.
TREND FORECAST: While President Biden bragged that the sanctions mean “Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin’s war machine,” he did not mention that it is also dealing a powerful blow to the American people.
These rising energy prices have been blamed for playing a major role in the persistently high inflation in the U.S. and volatile stock market. The Washington Post pointed out that diesel is “the workhorse of the global economy.”
“It’s used everywhere to keep trucks, tractors, freight trains and factories moving,” the paper said. “And its ubiquity means the increase in its price will exacerbate global inflationary pressures.”
Sen. Ted Cruz, the Texas Republican, took to Twitter last week and accused the Biden administration of creating the energy mess in the country.
“The price of diesel has gone up 53¢ in the last month,” he said. “President Biden’s war on energy has no end in sight.”
Beyond the diesel front, the average price for gasoline in California broke a new record, hitting $6 a gallon today. JPMorgan told CNN that “There is a real risk the price could reach $6+ a gallon by August” nationally.