Diesel prices have skyrocketed on both sides of the Atlantic, with the U.S. average hitting $5.85 per gallon on Friday, September 4, while UK residents are paying 183.5p per litre. In California specifically, diesel now costs a staggering $7.70 per gallon.
This marks a nearly 60% increase from $3.71 a year ago. The sudden increase in price originates from a perfect storm of geopolitical conflicts. The six-month war between the US-Israel alliance and Iran has disrupted tanker traffic through the strategic Strait of Hormuz, while Ukrainian drone attacks on Russian refineries prompted Moscow to extend its ban on diesel exports.
These disruptions altogether have taken around 2 million barrels per day of supply offline. The condition affected far beyond the pump. As diesel powers the trucks, trains, and ships that move nearly everything, it has disrupted Amazon, UPS, FedEx, and the US Postal Service, with increasing costs inevitably passed to consumers.
Farmers are hardly affected. In the UK, red diesel that is used for agricultural vehicles has raised 10% in less than a week to £1.10 per litre. Experts warn that the crisis can go deeper as global diesel stocks dwindle.