Ad News Live
Diesel Prices: Diesel fuel prices have crossed the $5-per-gallon mark this week.
The spike follows a renewed round of large-scale fighting between Iran and the United States.
Economists warn the surge could reignite fears of a worldwide oil shortage.
The rising cost of diesel isn't happening in isolation. Ukraine's ongoing attacks on Russian refining facilities are also squeezing supply.
Together, these pressures threaten to push financial strain far beyond the pump.
Economists told ABC News the ripple effects could touch groceries, home deliveries, and moving services alike.
Why Diesel Prices Matter Beyond the Pump
Diesel fuel keeps much of the global supply chain moving. Trucks, trains, and cargo ships all depend on it to transport goods across the world. A price increase on any single item might look small on its own.
But experts say those small increases add up fast. "This will hit anything that's shipped," said Michael Sposi, an economics professor at Southern Methodist University.
Strait of Hormuz Back in the Spotlight
Just last month, oil prices had dropped to their lowest point since the Iran conflict first broke out in late February.
That decline came after a preliminary ceasefire agreement included steps to reopen the Strait of Hormuz.
That progress now looks shaky. A fresh exchange of strikes between the U.S. and Iran has cast doubt on whether the agreement will hold. Crude prices have climbed as a result.
On Tuesday, the U.S. Navy resumed its blockade of the strait, walking back one of its key commitments under the deal.
The move came after Iran fired on oil tankers passing through the waterway, which handles roughly one-fifth of the world's oil supply.
Global crude prices have since surged past $86 a barrel. That's a 22% jump since the war began, according to the U.S.
Energy Information Administration, which also reports that oil makes up about 40 cents of every dollar spent on diesel.
Diesel Costs Climb, But Remain Below Last Month's Levels
AAA data shows the average price for a gallon of diesel now sits at $5.05. That marks a 4% jump over just the past week. Even so, diesel remains cheaper than it was a month ago.
Because diesel powers so much of the supply chain, higher fuel costs tend to trickle down.
Wholesalers often raise their prices to offset higher transport expenses, analysts say. Retailers, in turn, frequently pass those costs on to shoppers.
Omair Sharif, founder of Inflation Insights, previously told ABC News that transportation costs typically account for 3 to 4 cents of every dollar spent on food.
Fresh Produce and Delivery Services Likely to Feel It First
Fruits, vegetables, and other perishable goods are especially exposed, according to Sposi.
Their production is diesel-intensive, and their short shelf life leaves little room to absorb delays or cost increases.
Grains and other perishables could see similar pressure, he said.
Government data already shows fruit and vegetable prices climbing at an annual rate of 5.3%. That's nearly double the inflation rate for food at home overall.
Jason Miller, a supply chain management professor at Michigan State University, said consumers could also see higher bills for home movers and delivery services as companies pass along fuel costs.
"Any type of fuel surcharge associated with some form of delivery will make things more expensive," Miller said.
Inflation Numbers Hold Steadier Than Expected
Not every price category has moved sharply higher. Food-at-home prices rose 2.7% in June compared with a year earlier, a figure that came in below the broader inflation rate and matched the previous month's pace.
"I'm a little surprised by some of the inflation numbers not being higher," Sposi said.
He suggested wholesalers may be absorbing some costs themselves rather than passing them on to consumers.
Overall inflation rose 3.5% year-over-year in June, according to federal data released Tuesday.
That's down from 4.2% the month before. Even with the improvement, inflation remains well above the Federal Reserve's 2% target.
President Donald Trump highlighted the inflation report Tuesday, telling reporters: "Prices are way down — prices are coming way down. And we're going to bring them much lower yet."
What Comes Next
Diesel prices could keep climbing if tensions in the Strait of Hormuz persist and oil investors remain on edge about a broader shortage, Miller said.
A cooling of tensions, on the other hand, could send prices back down, much like it did last month.
"The biggest wild card now is what happens in the Strait of Hormuz," Miller said.
Follow Us
