Record diesel prices raise costs for Cincinnati businesses and consumers

The prices of diesel are reaching record levels across the United States.

The national average price of diesel reached a record $6.2301 per gallon on Sept. 14, according to the American Automobile Association (AAA).

The price is up from $5.9015 a week earlier and $3.6923 a year ago. AAA’s current record is also above the previous national high of $6.0549 per gallon recorded in June 2022. 

Ohio is also seeing diesel prices above $6 per gallon. AAA listed the state’s average at $6.1095 per gallon on Sept. 14.

The increase could affect transportation, agriculture, delivery services and other businesses that rely heavily on diesel fuel.

Higher diesel costs could affect prices

Diesel plays a major role in the transportation of goods throughout the country, particularly through trucking and commercial freight.

When fuel costs rise, transportation companies can face higher operating expenses. Businesses may absorb some of those costs, pass them along to customers or adjust their operations.

The impact can extend beyond the pump because many products move through multiple stages of transportation before reaching consumers.

The Associated Press reported that the diesel increase is already putting pressure on the cost of hauling everyday goods, including food and other products. 

For Cincinnati businesses that depend on trucking and deliveries, sustained fuel costs could add another expense to already elevated operating costs.

Global supply disruptions drive diesel surge

The record prices come as global energy markets face significant supply disruptions.

Recent reporting has linked the diesel surge to disruptions associated with the conflict involving Iran, continued attacks on energy infrastructure in Ukraine and restrictions affecting global fuel supplies. 

The Strait of Hormuz has also become a major factor in global energy markets because of its importance to oil and refined-fuel shipments.

U.S. diesel inventories remain under pressure as global supply disruptions increase competition for available fuel.

Reuters reported that the national diesel average had crossed $6 per gallon for the first time by Sept. 10, while crude oil prices also moved above $100 per barrel. (⁠Reuters)

Economists warn of inflation pressure

Higher diesel prices can contribute to inflation by increasing the cost of transporting and producing goods.

Janet Harrah, an economist with Northern Kentucky University’s Haile College of Business, said the effect can eventually reach consumers as companies face higher transportation expenses.

The concern comes as Americans are already dealing with elevated prices in several parts of the economy.

However, higher diesel prices do not automatically translate into an equal increase in consumer prices. The eventual effect depends on factors including how long fuel prices remain elevated, how much businesses absorb and whether energy prices stabilize.

The Wall Street Journal reported that diesel prices had risen more than 60% from a year earlier by mid-September, adding to concerns about continued inflationary pressure. 

For consumers in Cincinnati and across the region, the most noticeable effects could emerge through transportation-related costs and prices for goods delivered by truck if the elevated fuel prices persist.