Diesel Prices: How Much Worse Could They Get?

Diesel prices are climbing sharply in the United States and overseas, raising concerns about higher freight costs, inflation and the potential impact of any U.S. move to restrict diesel exports. Analysts say refinery disruptions, supply shortages and geopolitical tensions are contributing to the market volatility.

Higher Diesel Costs Reach Freight Markets

AAA has reported the national average price for diesel at more than $6 per gallon, with figures cited in recent reports ranging from $6.23 to $6.45 per gallon. One report said the average had increased by approximately 84 cents in 30 days, while another cited a recent record of $6.53 per gallon.

Diesel is used extensively by commercial trucks, agricultural equipment, construction machinery, school buses and backup generators. Because of that broad dependence, higher diesel prices can affect transportation costs throughout the economy.

Fuel analysts warn that sustained volatility could place upward pressure on fuel surcharges and freight rates. Higher operating costs may also be reflected in the prices of food, manufactured goods and other products moved by truck.

Export Restrictions Could Reshape Regional Supplies

President Donald Trump has said he is “very seriously” considering a ban or other restrictions on U.S. diesel exports. The proposal has drawn warnings from analysts and representatives of the U.S. oil industry, who say limiting exports could produce uneven effects across the country.

Refinery-heavy states such as Louisiana and Mississippi could see temporary relief if more fuel remained in domestic markets. However, regions such as the Northeast, which rely more heavily on imported diesel, could face higher prices if international supplies were restricted.

Ipek Ozkardeskaya, a senior analyst at Swissquote, said export restrictions could cause global diesel prices to rise rather than reduce costs. Analysts also have warned that a prolonged restriction could increase the cost of imported fuel and worsen supply problems in Europe.

Global Market Pressures Add to Uncertainty

Diesel markets have also been affected by refinery disruptions, supply shortages, sanctions involving Russia and continuing tensions in the Middle East. Reports from the United Kingdom said diesel prices had surpassed £2 per liter, while some analysts warned prices could rise to £2.50 or even £3 per liter under more severe supply conditions.

Approximately 30% of vehicles on UK roads reportedly use diesel, including about 38% of heavy goods vehicles. Higher fuel costs for those vehicles could increase the expense of moving goods across the country and throughout Europe.

Alan Gelder, senior vice president for refining, chemicals and oil markets at Wood Mackenzie, said a major release of diesel reserves could reduce wholesale prices by $20 to $30 per barrel, equivalent to roughly €0.10 to €0.15 per liter at the pump.

Inflation Concerns Grow

Tom Kloza, a widely cited fuel analyst, said consumers often respond more visibly to gasoline prices than diesel prices, even though diesel costs influence the price of many goods and services.

Economists have warned that a diesel spike could add to inflationary pressure. Capital Economics previously found that energy prices rose sharply after Russia’s invasion of Ukraine in 2022, while the European Central Bank reported that gas prices increased by more than 180% during that period.

With trucking, farming and industrial operations heavily dependent on diesel, analysts say the direction of fuel prices will remain an important factor for carriers, shippers and consumers.