High diesel prices are becoming a problem for the U.S. economy and Trump: High gas prices have been a reality for Americans throughout 2026, especially since the war in Iran broke out.
But lately, diesel prices have started to soar even more, threatening ripple effects across the U.S. economy. And that’s something that could create a big political problem for President Trump’s party in November’s midterm elections.
President Donald Trump attends an event celebrating the 2025 NCAA Division 1 Men’s Basketball Champion Florida Gators, Wednesday, May 21, 2025, in the East Room of the White House. (Official White House Photo by Daniel Torok)
President Donald Trump gives remarks after presenting the newly-created “Medal of Sacrifice” to three fallen officers’ families from the Palm Beach County Sheriff’s Office, Monday, May 19, 2025, in the Oval Office. (Official White House Photo by Joyce N. Boghosian)
According to a Financial Times analysis published on Tuesday, rising diesel prices “threaten [a] new jolt of inflation” this fall, ahead of the vote in November. Diesel cost $3.46 at the start of the year, but surged throughout the Iran war, occasionally dipping on a couple of occasions when it appeared the conflict was nearly over. At the same time, the continuing war between Ukraine and Russia has affected oil supplies as well, with frequent drone strikes on oil tankers and refineries.
Per FT, the “pump price” of diesel hit $5.47 a gallon on Tuesday, an eight percent increase over the last month, and is approaching the all-time high of $5.82, which occurred shortly after Russia’s invasion of Ukraine in 2022. The “crack spread,” which is the difference between the cost of diesel and crude oil, has also reached a record high. It’s sometimes called the “3-2-1 spread.”
Per Bloomberg News, that spread, defined as the “margin for making diesel from crude oil,” has risen above $100 per barrel. Monday was the first time that it had ever settled in the triple digits, after that number had never gone above $89 per barrel before this year.
The “Crack Spread,” Skip York wrote in a New York Times op-ed on Wednesday, “is going to make your life unpleasant.”
This is amid the continuing wars in Ukraine and Iran, which have both affected global supplies. Bloomberg calls it “a near-perfect storm of factors.”
How It Affects the Economy
The high cost of diesel can have many effects. It drives up costs for truckers and across the industrial chain, and businesses may pass those costs on to customers. That could mean inflation that Americans notice day to day.
“It’s already a crisis — a quiet crisis,” Tom Kloza, chief energy adviser at Gulf Oil, told the Financial Times. “These are body punches to the middle of the economy. I think they’re going to have a pretty dramatic impact.”
The new fuel inflation, FT added, is “feeding into a sell-off in US government bonds.”
The budding crisis has led U.S. refineries to run at “full tilt,” the Financial Times reported, and Robert Campbell at Energy Aspects told the newspaper that this has made the U.S. the “supplier of last resort,” with so much capacity offline in the Middle East and Russia.
President Donald J. Trump greets Ambassadors David Perdue and Xie Feng, Executive Vice Minister of Foreign Affairs Ma Zhaoxu and Minister of Foreign Affairs Wang Yi at Beijing Capital International Airport, China on Friday, May 15, 2025, before boarding Air Force One en route Washington, D.C. (Official White House Photo by Daniel Torok)
“Diesel is the lifeblood of the industrial economy, and you don’t just turn it off,” Campbell added, per the FT story.
But with that much capacity, any disruption would naturally send prices even higher, which is a real worry during hurricane season.
“When the refining system is running flat out, every producer matters,” Kevin Book at ClearView Energy Partners told the Financial Times.
“So any outage that is caused by any reason, whether it’s in wartime or just a consequence of an accident, could tighten supplies meaningfully.”
Trouble For Trump?
For a president who ran on promises to reduce inflation and keep gas prices down, this could create a political problem for President Donald Trump, with the midterm elections approaching and his final two years in office ahead. Neither Trump nor his party seems to have an easy answer.
And while it’s not always easy to tie rising fuel prices to specific actions by a president, they tend to get blamed regardless, and in this case there’s a clear causal tie between the invasion of Iran and the rise in energy prices, and any other second-order effects on other parts of the economy.
White House spokesperson Taylor Rogers didn’t sound worried in a statement to the Financial Times.
“President Trump and his entire energy team have taken decisive actions to mitigate disruptions to the energy markets and remain firmly committed to unleashing American energy dominance and cutting costs,” Rogers said.
About the Author: Stephen Silver
Stephen Silver is an award-winning journalist, essayist, and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review, and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, national security, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.
