Diesel is the talk of the town, and for good reason: The price of diesel fuel is at a record high in the United States, recently reaching an average of $6.53 per gallon.

A year ago, it was averaging $3.69 per gallon, meaning it has skyrocketed roughly 77%.

While the price of standard, regular unleaded gasoline is also sky-high (averaging around $4.50 per gallon), the price of diesel has come to dominate the latest news cycle, mostly because it’s one of the most important cost inputs in the broader economy.

That is, diesel fuel powers many heavy-duty trucks, tractors, ships, and even locomotives, among other machinery, effectively giving life to some of the largest industries in the world. As such, with diesel prices up, that means overall costs go up, which cascades down into goods and services. 

In other words: If the cost of fueling up a tractor on a farm increases 77% in a year, the cost of the goods the farm produces is going to increase as well. For industries or businesses that often straddle a very thin line between profit and loss, a significant price hike could be a death knell.

And farmers are feeling it. “High diesel prices ARE KILLING FARMERS INCOME,” Republican Sen. Chuck Grassley of Iowa recently posted on X.

Ultimately, it’s likely that pretty much everything is going to become more expensive as a result of the diesel price spike.

The price of diesel is largely determined by the price of crude oil, costs related to distribution and retail sales, and refinery margin.

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