U.S. diesel prices reached $5.688 per gallon on Tuesday, according to the American Automobile Association, placing them just three cents below the all-time national record of $5.816 set in June 2022 during the energy crisis triggered by Russia’s invasion of Ukraine.
The price surge marks the highest level since April, when diesel first spiked during the initial phase of the U.S.-Iran war. After a brief pullback over the summer, prices have climbed again as renewed strikes near the Strait of Hormuz and Russia’s ongoing refinery attacks continue to disrupt global supply.
Diesel powers the backbone of the global economy. Trucks carry roughly 72% of U.S. freight by weight. Agricultural equipment depends on it during planting and harvest seasons. Construction machinery runs on it. When diesel prices spike, the cost increase ripples through every layer of the supply chain, from farm gates to supermarket shelves.
Supply crunch deepens
The squeeze comes from multiple directions simultaneously. Russia, historically one of the world’s largest diesel exporters, extended its export ban in late August following waves of Ukrainian attacks on its refineries. Moscow’s refinery utilization rates have dropped to multi-year lows, cutting the volume of finished fuel available for export.
In the Middle East, U.S. and Iranian strikes near the Strait of Hormuz have periodically disrupted shipping through the waterway, through which roughly 20 million barrels of oil transited daily before the conflict. Even when the strait remains open, insurance premiums for tankers have climbed sharply, adding $2 to $4 per barrel in freight costs.
U.S. diesel supplies are at their lowest level ever for this time of year, according to the Energy Information Administration. Refiners are running near maximum capacity, with diesel-making margins approaching all-time highs, but the output has not been enough to offset the combined pressure from import restrictions and rising seasonal demand.
Goldman Sachs has warned that “diesel remains at the epicenter of the rally,” pointing to attacks on refineries in both the Middle East and Russia that have depleted global processing capacity. The bank increased its diesel profit forecasts in late August, citing structural tightness that is unlikely to ease before year-end.
Regional prices tell the story
The national average masks wide regional variation. California drivers face the steepest costs, with diesel averaging $7.04 per gallon, according to the EIA. The West Coast excluding California averages $5.86. The Central Atlantic region sits at $5.84, while the Midwest reports $5.64. The cheapest fuel can be found along the Gulf Coast at $5.48, benefiting from proximity to major refinery clusters in Texas and Louisiana.
For owner-operators and small trucking companies, the price increase has been brutal. The EIA reported that diesel jumped nearly 20 cents per gallon in each of the last two weeks of August alone. At those rates, a long-haul truck burning 150 gallons per day pays roughly $60 more per day than it did a month ago.
Spot market freight rates have not kept pace with fuel costs. Truckstop.com and FTR Transportation Intelligence reported that total broker-posted rates fell 2.7 cents per mile during the week ending August 21, to $3.17 per mile, their lowest since early April. The firms noted that fuel-adjusted linehaul rates are up 37% year over year, but the comparison is softening as diesel eats into the improvement.
Trump pressures refiners
The political pressure is building. President Donald Trump met with U.S. oil refiners in a closed-door session on September 1, pressing executives to boost domestic production of diesel and gasoline. Trump made clear he wants lower pump prices ahead of November’s midterm elections, according to White House officials who described the meeting on condition of anonymity.
The refiners pushed back, arguing that they are already running at near-maximum utilization rates and that the supply problem is structural, not a matter of willingness to produce. Building new refining capacity takes five to seven years, and the regulatory environment for new projects remains uncertain. Existing plants are processing the most crude since the Iran war erupted, but global supply losses have outpaced the gains.
The pressure carries political risks for Trump in New England and the Upper Midwest, where heating oil, which is essentially interchangeable with diesel, is widely used in residential heating. Maine, home to one of the most competitive Senate races this fall, has the highest proportion of oil-heated homes in the country. High diesel prices in October and November could become a campaign issue in exactly the states where Republicans need wins.
Harvest season looms
The timing is particularly painful for agriculture. Harvest season across the Midwest and Great Plains requires heavy diesel consumption for combines, grain trucks, and irrigation pumps. Farmers who locked in fuel contracts earlier in the year at lower prices will fare better than those buying spot, but many small operations did not hedge.
Looking further ahead, heating season begins in earnest by late October in northern states. If diesel and heating oil prices remain elevated, households in the Northeast and Midwest face significantly higher energy bills. The National Energy Assistance Directors Association has warned that low-income families could see heating costs rise 15% to 20% above last year.
The national average diesel price has never risen above $5.82 per gallon in AAA’s records. Whether it breaks that ceiling in the coming weeks depends largely on whether the U.S.-Iran conflict de-escalates and whether Russia resumes diesel exports. Neither development appears imminent.
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