As the Cost of Diesel Fuel Soars, The Cost of Goods and Services Will Follow

A diesel-powered Mack truck

While gas prices in the United States and abroad have been setting new records, it is the price of diesel fuel that is rippling through the global supply chain.

The average cost of a gallon of diesel fuel is currently $5.19 in the United States, up almost 45% from 33.61 in January, according to U.S. government figures.    The current average price per gallon in New York State is $5.55 as of Thursday and it is $6.42 in California, according to data from the Automobile Association of America.

In Germany, the increase is almost as dramatic.  The retail price of one liter of diesel fuel is now €2.15 ($2.38) per liter, an increase of almost 30% in just four weeks, from €1.66 at the end of February, according to ADAC, the Allgemeiner Deutscher Automobil-Club.   That makes the cost of a gallon of diesel fuel there $9.00 on average.

While in the United States relatively few automobiles are powered by diesel, the fuel is crucial because it powers so many other kinds of vehicles and equipment that fuel the economy, including trucks, tractors, and school buses.

Trucks bring raw materials to factories and people’s Amazon and grocery orders to their doorstep.  Tractors and combines, which provide machine power for agricultural tasks that were manual one hundred years ago, plow, plant, cultivate, fertilize, and harvest drops.  When the price of operating these machines goes up, so does the cost of the world’s food supply.

Europe is largely dependent on Russia for diesel fuel and for crude oil, which it then refines into diesel and petrol.  Some experts believe that Europe may have to begin to ration diesel fuel if the shortage doesn’t ease within the next month.

(Photo: Accura Media Group)