The price of diesel hits a record high

Stay up to date with our Up First newsletter, sent every weekday morning.The price of diesel has reached an all-time high, according to AAA.The national average for a gallon is now $5.85.The price of diesel hasn't been this high since June 2022, when the average for a gallon reached $5.81 a few months after Russia invaded Ukraine, according to AAA data.The record high is significant because diesel powers much of the industrial supply chain in the United States via the "three t's" of the economy: trains, tractors, and trucks, says Patrick De Haan, petroleum analyst at GasBuddy, a travel app that tracks gas and diesel prices.A gallon of diesel cost $3.76 on the eve of the Iran war.

It's now up more than $2.And De Haan says, when diesel drives the supply chain and that cost goes up, "There's going to be a trickle down."Those increased costs trickle down into everything.

Lots of farm equipment relies on diesel — so higher diesel risks making the cost of farming, and eventually food, more expensive.And when it's more expensive to fill up trucks, those transportation costs risk spilling over into much of what people buy.

About 90% of the nation's 500,000 school buses run on diesel, and the rising price has stretched district budgets as the school year begins.Americans are already experiencing sustained inflation.Inflation across the economy was up 3.4% over the past year, according to the latest Consumer Price Index data released in August.

But energy prices are up significantly, which is eating into people's budgets, especially among lower-income households, according to an analysis from the Federal Reserve Bank of New York.Prices for most types of petroleum products have gone up since the war with Iran began in late February, limiting how much could flow through the Strait of Hormuz.But other supply chain pressures have made diesel uniquely exposed to price hikes.Some refineries in Asia have also limited their diesel exports, which has further constrained the glo...