Ed D'Agostino points out that skyrocketing diesel prices will impact our entire economy. It's not the President's fault, nor the Republican Party - it's conditioned by many events all around the world - but it's going to affect all of us.
Unless you own a trucking company, run a farm, operate heavy equipment, or drive a really big pickup truck, you may not have noticed how expensive diesel has become.
On September 15, AAA’s national average diesel price was $6.27 a gallon, compared with about $3.69 a year ago— a roughly 70% increase ... a 70% increase in a single year is an enormous shock to the economy.
Even if diesel prices were to fall from here, the shock will be working its way into grocery bills, freight charges, construction costs and home heating bills for many months.
. . .
What is unique about diesel, and why is its price outpacing oil and gasoline?
EIA expects U.S. distillate inventories (the category that includes diesel and heating oil) to fall below 100 million barrels in October, for the first time since 2003, and remain below the five-year range through the first quarter of 2027.
At the same time, refiners were already running at about 98% of capacity in late August, the highest utilization rate since 2018. In one sense that’s good news: refineries are responding to high prices by making more fuel.
The problem is they are already running near full capacity. That leaves less room to offset another supply disruption: an outage, a hurricane, a refinery accident or a further escalation of conflicts in the Middle East and Russia/Ukraine.
There may not be much relief coming. Several refiners have delayed planned maintenance to keep their refineries operating. At some point, they have to do the maintenance or risk an unplanned failure. Industry executives warn that diesel and heating-oil markets could remain tight well into next year, even if the Iran conflict ends.
. . .
For millions of households, winter means heating oil bills. Heating oil and diesel come from the same distillate pool. The differences are minimal, coming down to dyes for color and additives to help with either engine combustion or tank storage. You can run a diesel engine on heating oil, and you can fire your oil furnace with diesel.
. . .
Last winter, I relied primarily on oil to heat my New England home. It was a cold winter. On many days the electric heat pump did not make economic sense. Oil was the cheaper option. A typical monthly oil delivery was about 150 gallons and cost around $550.
A 60% increase would put a delivery to my home at roughly $900. Ouch! Thankfully, I can pay it. It won’t change my lifestyle. But for many, it will force hard decisions and uncomfortable compromises. If you are on a fixed income or living paycheck-to-paycheck, an increase like that is a serious problem.
For them, from their very real perspective, inflation will be sky high.
There's more at the link.
I'm worried that many voters will blame the Republican Party and President Trump for this, and punish them at the polls this fall. Sure, some of the blame is undoubtedly theirs, but a great deal also belongs to the Democratic Party and his predecessor, who "kicked the can down the road" for four years before his inauguration and did little or nothing to stop Iran's adventurism (particularly using Hamas, Hezbollah and the Houthis as proxies in their ongoing war with Israel). If President Trump was right about the threat Iran made to him concerning nuclear weapons, he had no choice but to act right away, without delay. A nuclear threat from intransigent religious fanatics can't be dealt with in any other way. However, people with hurting bank balances and empty wallets won't stop to consider that - they'll vote their pain, not something they can't directly and immediately feel for themselves.
I think we're in for a rocky ride until the elections . . .
Peter
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