Diesel Prices Are Rising to Record Highs – And That’s Bad News for Donald Trump: Experts are warning that the United States could face diesel shortages this coming winter.
Diesel reached record highs earlier this week amid a re-escalation in the Middle East and Russia’s recent export ban on the commodity.
Vice President JD Vance attends a bilateral meeting with President Donald Trump and Israeli Prime Minister Benjamin Netanyahu, Monday, April 7, 2025, in the Oval Office. (Official White House Photo by Emily J. Higgins)
President Donald Trump participates in a commemorative tree-planting ceremony at the South Portico of the White House, Tuesday, April 8, 2025, to replace the Jackson Magnolia with a descendant sapling. (Official White House Photo by Daniel Torok)
“Given disruption to Middle East and Russian diesel exports, and with little sign of an imminent recovery, middle distillate cracks are likely to remain highly elevated and volatile, particularly as we move towards seasonally stronger demand,” wrote ING commodities strategists Warren Patterson and Ewa Manthey on Wednesday, 2nd September.
Supply and demand economics dictate that when supply is low, the price rises.
Exports Up, Supplies Down
The war in Iran has naturally limited the supply of diesel worldwide, largely in part due to Iran’s chokehold on the Strait of Hormuz. The key shipping lane – through which 20% of the world’s oil exports once passed – has remained effectively closed since the war began back in February, with Iran threatening to attack any commercial vessel that tries to sail through.
As a result, U.S. exports of diesel are well above those of counterparts that rely on a war-free Persian Gulf. That said, U.S. inventories of distillate fuel oil, from which diesel is produced, are at their lowest levels in four years.
The situation becomes more concerning when you factor in that winter heating oil is produced from the same distillate fuel oil as diesel. Demand is much higher across the U.S. during the coldest months of the year, so an even sharper rise in prices could accompany a greater drop in available supply.
Prices Rise, Growth Stagnates
At the annual FTR Transportation Conference in Indianapolis earlier this week, FTR Transportation Intelligence CEO Jonathan Starks noted the ongoing rise in commodity prices. “Over the last year, we’ve clearly turned in the wrong direction,” Starks said, adding that the aluminum produce price index rose by as much as 50% in recent months.
Growth in other sectors such as housing is also not looking promising. FTR Trucking Vice-President Avery Vise said: “Housing is stuck, not really moving,” noting that sales of new homes had remained stagnant for three years. He also described how mortgage rates fell below 6% prior to the start of the Iran war, but have remained above 6% since.
“There was that opportunity to see something move in housing, and it got essentially taken away,” Vise added, noting a more positive outlook in commercial construction largely thanks to AI data centers. “If I had a nickel for every time I’ve heard ‘data center’, I could probably retire quite soon. It’s producing a lot of freight for flatbeds right now.”
Diesel Approaching New Highs
The average price of a gallon of diesel reached $5.60 on Monday, 31st August. That’s up by $1 since the start of July, and almost $2 higher than this time last year. With inventories approaching their lowest ever levels, and demand approaching its yearly peak, little respite is predicted over the coming months.
“That shortage will be acutely felt by the farmers during the harvest, and so the inflationary consequences can be greater at harvest time,” Kevin Book, managing director at ClearView Energy Partners, told Politico. “There is a very strong history of caring about heating oil ahead of elections.”
Donald’s Diesel Dilemma
The midterms are only two months away, and President Donald Trump faces the possibility of losing control of Congress during his swansong two years as the nation’s Commander-in-Chief. The Senate is arguably less of a concern, considering that the last time this cohort fought for election was in 2020, when Trump was voted out of the White House, but the House of Representatives is entirely up for grabs given the two-year term limit.
Trump’s war in Iran is unpopular, and his approval ratings are dropping below 30% in some polls. Before returning to the Oval Office, he promised to rejuvenate an economy he claimed was ruined by his predecessor. Yet, diesel prices are approaching the June 2022 record of $5.816, and voters across the country are increasingly feeling the financial strain.
In part, the rise in diesel prices stems from external factors and is therefore beyond Trump’s control. That said, diesel was much cheaper when the Strait of Hormuz was open, and many may feel that its closure can be attributed to the man who launched Operation Epic Fury six months ago.
About the Author: Shay Bottomley
Shay Bottomley is a British journalist. He has written for the Western Standard, Business Insider, Maidenhead Advertiser, Slough Express, Windsor Express, Berkshire Live and Southend Echo.
