US Diesel Prices Hit All-Time High Amid Global Fuel Shortage
The average retail price of diesel fuel in the US surpassed $6 per gallon for the first time in history. The increase comes amid a diesel shortage on the global market and creates an additional risk of rising costs for transportation, food, and industrial goods.
According to the American Automobile Association (AAA), on September 11, the average price of diesel in the country reached $6.0556 per gallon. AAA reports this level as a new all-time high.
The increase accelerated sharply over the past week. As recently as September 4, diesel averaged $5.85 per gallon and had just surpassed the previous record from 2022. A month ago, the fuel cost about $5.32, and a year ago about $3.71 per gallon.
Particularly high prices are recorded in California, where average diesel has already approached $8 per gallon. According to AAA, on September 11, the average price in the state was $7.98, and in some metropolitan areas it has already exceeded $8.
The rise in diesel prices has broader implications for the economy than direct costs at the pump. It is the primary fuel for freight transportation, agricultural machinery, and parts of the construction industry, so the increase in its cost is gradually passed through to carrier rates and the cost of goods.
US Diesel Inventories Remain Low
Additional pressure comes from limited supply on the global market. The US Energy Information Administration (EIA), in its September forecast, expects American distillate inventories, which include diesel, to fall below 100 million barrels and remain below the minimum levels of the past five years for an extended period.
The EIA links the shortage to reduced supplies from the Middle East, Russia, and China. The lack of fuel on the international market simultaneously supports high prices and encourages American companies to increase diesel exports.
According to the latest weekly EIA data, as of September 7, the average US on-highway diesel price already stood at $5.967 per gallon. In California, it reached $7.764. Daily AAA data show that the increase continued after that.
Russian Refineries and Middle East Exacerbate Shortage
One reason for market tightness has been disruptions in Russian refining operations after a series of Ukrainian strikes on refineries. Russia has been forced to restrict diesel fuel exports, reducing available volumes on the world market.
At the same time, problems emerged in the Middle East. Military actions and unstable shipping through the Strait of Hormuz are limiting both refinery operations and the export of petroleum products from the region.
This week, risks also intensified in the Red Sea. Yemen's Houthis expanded their offensive along the coast toward the Bab el-Mandeb Strait—another critical route for the shipment of oil, fuel, and other cargo between Asia and Europe.
For the US economy, the new diesel record means the fuel crisis is increasingly moving from oil quotations into real business costs. Axios notes that more expensive diesel creates additional inflationary pressure, since a significant portion of goods in the US are transported by truck at least at one stage of the supply chain.
The situation could remain tense into the autumn, when demand for distillates traditionally rises from agriculture and for heating. The EIA expects the inventory deficit to persist through much of 2027.
