By Naveen Athrappully
With diesel prices remaining elevated, inflation is becoming that much harder to bring under control, placing more financial burden on American consumers.
Vehicles like trucks, tractors, trains, barges, and construction equipment—which are part of the commercial traffic—are mostly run on diesel. As such, the fuel is intricately linked to consumer inflation as their prices factor into the final cost of most products.
“The economic impact is insidious because everything moves across the country powered by diesel,” Tom Kloza, the global head of energy analysis at the Oil Price Information Service, told The New York Times. “It’s an inflation accelerant, and the consumer ultimately has to pay for it.”
According to Sherri Garner Brumbaugh, president of Garner Trucking, in Findlay, Ohio, the weekly cost of fueling a heavy-duty truck two years ago was only $600.
This jumped to $1,300 by September. “A good portion gets passed onto my customers with a fuel surcharge,” Brumbaugh told the media outlet.
Since Joe Biden became president in January 2021, the retail price of diesel in the United States has gone up from $2.64 per gallon to $5.33 by the end of October 2022, an increase of more than 101 percent. During the same period, annual inflation jumped from 1.4 percent to 7.7 percent.
U.S. inflation in 2021 averaged 4.7 percent. At its September meeting, the Federal Open Market Committee (FOMC) predicted inflation to average 5.4 percent this year, and then fall to 2.8 percent in 2023. However, until diesel prices ease down, lowering inflation might prove to be a tough challenge for the Fed.
Democrat Policies, Trucker Woes
A key reason for the tight diesel supply is said to be refinery closures. In the last few years, 5 percent of America’s refining capacity has been shut down.
While some closed down due to the COVID-19 pandemic cratering demand, others shut shop due to low profits, and others were converted to manufacture biofuels.
The tightest diesel market is in the Northeast region. In a recent interview with Fox News, Mike Taylor of Combined Energy Services blamed Democrat policies for triggering the diesel crisis.
“The climate change agenda in the Northeast … is really what’s causing this,” he said, citing the “demonization of fossil fuels” by the Biden administration.
Truckers are having a tough time with rising diesel costs. While speaking to Fox News, Rick Todd, CEO of the South Carolina Trucking Association, pointed out that truckers usually pay gas with cash, and do not get paid for several weeks or even more, which puts them in a troublesome spot.
In a tweet on Nov. 10, Sen. Bill Hagerty (R-Tenn.) slammed the Biden administration for waging a “war” on American energy that has affected people across the country.
“As the holiday season approaches, truckers and farmers are facing burdensome sky-high diesel prices and a shortage at a time when they are most reliant on this form of energy,” he said.