For any industry reliant on diesel, the surge in price threatens to fuel inflation even more—and could ultimately be passed on to consumers. Besides the transportation sector, diesel also powers key machinery in the agricultural and construction sectors, helping keep farming and manufacturing operations moving forward, Craig Fuller, CEO of transportation information provider FreightWaves, wrote on the FreightWaves website Sunday. “Since diesel powers the industrial economy, the recent surges in prices will put additional inflationary pressures on the U.S. economy–in the sectors that have already experienced unprecedented inflation–transportation, agriculture, and construction,” Fuller wrote. And prices are likely to keep going up, Verleger said. It’s hard for refiners to keep up with the demand because diesel has to meet government-mandated low-sulfur fuel requirements, he said. That’s become tougher given declines in the production of low-sulfur crude oil from Nigeria—a type of crude that’s ideal for making diesel fuel, he said. “What happened is COVID cut demand for diesel so that we didn’t have a problem in 2020, a problem in 2021, but now we do,” Verleger said. “It’s a big deal. It’s very hard to fix it.” Have a question, comment, or story to share? You can reach Terry at tlane@thebalance.com. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
