Diesel prices in the United States set a new record this week as the Iran war continues to drive up global fuel costs. The average price hit $5.85 per gallon nationwide Friday morning, according to AAA, surpassing the previous record of $5.82 set in June 2022, during the initial months of Russia’s invasion of Ukraine.
Diesel powers much of what happens behind the scenes in the economy by fueling trucks, trains, tractors and more. Unlike gasoline, which drivers can conserve by changing their driving behavior, there is no substitute for diesel. Higher diesel prices are likely to lead to higher prices, especially for groceries, at a time when inflation remains stubbornly high. Since the start of the war with Iran, diesel prices have risen by $2.09 per gallon, or almost 56%.
So, what’s causing the increase? Primarily the war with Iran and the closure of the Strait of Hormuz, through which roughly one-fifth of the world’s oil passes. Additionally, successful Ukrainian attacks on Russian refineries led Russia to ban diesel exports until the end of September. The nation is the world’s second-largest exporter of diesel.
Gas prices are also on the rise. Drivers this Labor Day weekend will pay the most they ever have at this time of year, according to AAA. After gas prices set a record in August, the national average is $4.15 per gallon going into the holiday. The previous Labor Day weekend record, $3.82, was set in 2012. (The highest average U.S. gas price on record was set in June 2022 at $5.02 per gallon.)
Oil prices are up 7% for the week, the biggest weekly gain since July, passing $97 a barrel at one point on Thursday. Demand for gasoline usually falls after Labor Day weekend, which in turn leads to lower prices. But as oil prices remain high, gas prices will likely continue to set records into the fall.
Meanwhile, attacks continue in the Persian Gulf, threatening to further disrupt the transport of fuel worldwide. But Vice President JD Vance said during a White House press briefing on Thursday that he “wouldn’t call it a war,” calling a recent exchange of strikes a “flare-up.” He also said, in response to a question about ending the conflict before the midterms, “You would have to ask the Iranians,” which puts the responsibility on Iran and suggests that there is no clear end in sight.
Vance on Thursday would not say when Americans should expect to see lower fuel costs and suggested that they should be grateful prices aren’t higher. “Gas, frankly, could have been much, much higher were it not for our efforts,” he said. “But I’m not going to make a promise about when it’s going to return to $3.”
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