Diesel prices just hit an all-time high of $6.51 a gallon, according to AAA, and even if you have never pumped a drop of diesel in your life, it is already costing you money.
That national average is more than $2.80 higher than it was this time last year, and it jumped more than 40 cents in the last week alone. Before the U.S. and Israel launched their war against Iran in late February, a gallon of diesel cost about $3.76. Regular gas is expensive too, sitting around $4.47, but diesel now costs roughly $2 more per gallon than what most people put in their cars.
In some places it is even worse. California drivers were paying $8.40 a gallon on Friday, and Washington and Hawaii were both above $7. Texas had the cheapest diesel in the country and was still just under $6.The reason diesel matters to everyone is simple. It is the fuel that moves the country. The trucks that deliver food to grocery stores, the freight trains and delivery vans that carry packages, the tractors on farms, construction equipment, city buses, school buses, and garbage trucks mostly run on diesel. When it costs more to fill those tanks, businesses pay more to get products to you, and they pass that cost along.
The grocery store is where most people will notice it first. Meat, fruit, vegetables, and other fresh food have to be trucked in and restocked constantly because they spoil, so they feel expensive diesel faster than canned goods or items that sit on a shelf for months. Farmers get hit twice, once running their equipment and again paying to haul their crops to market.
Online shopping is taking a hit too. Some businesses have already started adding extra fees to online orders and packages to cover their higher fuel costs. Patrick De Haan, head of petroleum analysis at GasBuddy, warned that record diesel prices will affect every delivery Americans receive and are likely to push inflation back up across the supply chain.
That ties directly into your wallet in another way. Higher fuel costs from the Iran war are one of the main reasons the Federal Reserve raised interest rates last week, which means expensive diesel is part of the reason borrowing on credit cards and loans is getting more expensive too
Winter could add another bill. Heating oil, which many homes in the Northeast and Mid-Atlantic use to stay warm, is nearly the same fuel as diesel, and both compete with jet fuel for the same limited refining capacity. Diesel prices also tend to rise in the fall, the opposite of regular gas, because demand for heating fuel picks up just as farmers are harvesting.
So why is diesel so much higher than gas? Part of it is taxes, since the federal government charges 24.4 cents a gallon on diesel compared with 18.4 cents on gasoline. The bigger driver right now is the war. Most tanker traffic has been bottlenecked in the Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula that about a fifth of the world’s oil normally passes through. Crude oil, the raw material used to make both diesel and gasoline, has been trading above $100 a barrel, up from about $70 before the war.
Lawmakers are now arguing over what to do about it. Iowa Sen. Chuck Grassley called on Trump over the weekend to ban U.S. diesel exports, saying high diesel prices are killing farmers’ income. Senate Majority Leader John Thune said he is open to looking at the idea, and Tennessee Rep. Tim Burchett filed a bill that would block diesel exports through January 2027. Interior Secretary Doug Burgum said every idea should be on the table but added that he is not confident an export ban would actually bring prices down, and the fuel industry’s trade group has warned it could shrink supply and push prices even higher.
