Democrats Have No Plan for Soaring Diesel Prices

KEY TAKEAWAYS

• While American families are being crushed by high gasoline prices, consumers and businesses are also feeling the pain of high diesel prices. Average diesel prices have climbed at an even faster rate than regular gasoline prices over the last year, up 80% over the past year.
• Diesel is essential for the movement of freight and people on trucks, buses, trains, and ships, as well as for agricultural and military equipment.
• Democrats have pitched messaging bills and gimmicks as “solutions” for high gasoline prices to try to give themselves political cover, but their leaders have yet to focus on skyrocketing diesel prices.

On June 9, the nationwide average cost for a gallon of regular gasoline reached $5.00. While families are rightfully concerned about gasoline prices, the high cost of diesel fuel may be doing even more to drive up the price of goods. While the average price for regular gasoline is up 63% over the past year, diesel has climbed by 80%, reaching a record high of $5.79 per gallon on June 16. Diesel fuel is essential to industries across our economy, but Democrats have no plan to help families who are paying inflated prices for goods and businesses that are suffering.

Diesel Prices Rising Even Faster than Gasoline

Diesel is Essential

From the transport of goods by truck and rail, to powering industrial and farm equipment, diesel fuel is essential to commerce and the economy. As the price of fuel goes up, it adds price pressure at multiple stages of production and distribution of products families buy. A Moody’s economist estimated about 20% of the rise in inflation – which reached a 40-year high of 8.6% in May – can be attributed to diesel prices. Diesel is also used by the Department of Defense to fuel ships, tanks, and other vehicles, so higher fuel costs mean the federal government has to increase spending to maintain the same level of defense.

Diesel In Use All Across the Economy

Businesses across a range of industries are feeling the squeeze of high fuel costs, and they are being forced to increase the cost of goods to compensate. Truckers are paying significantly more for fuel compared to one year ago. A truck driver who paid around $386 to fill a 120-gallon tank in a dump truck a year ago is now paying $694 for the same amount. Truckers have no choice but to fill up their rigs to work, with some spending thousands more a week on fuel than they were a year ago. According to the American Trucking Associations, motor carriers spent $112 billion on diesel in 2019 when the average price per gallon was between $2.97 and $3.17. The national average price is now nearly double that. ATA estimates that 97% of carriers run 20 trucks or fewer and says that these small businesses are especially affected by high prices.

Farmers, who use diesel-powered equipment, are also being pinched by fuel costs. According to the Department of Agriculture, as of June 16 the average cost of farm diesel was $5.25 per gallon, representing an increase of 97% from this time last year, when the average price was $2.66 per gallon. Farmers and ranchers are facing growing prices for necessities, which is contributing to higher food costs for families. Food prices were up 10% in May compared to a year ago.

Democrats’ Do-Nothing Strategy

Like gasoline, diesel is produced from crude oil, so its price is linked to that of oil and it is subject to the same volatility. According to the Energy Information Administration, crude oil accounts for roughly half the cost of a gallon of diesel, and refining accounts for just over a quarter. Refining capacity has shrunk in the past several years. Now, in the wake of the left’s war on American energy, investors are nervous about dedicating resources to new oil and gas infrastructure from which they may not earn a return. Earlier this month, the CEO of Chevron Corporation said: “We haven’t had a new refinery built in the United States since the 1970s. My personal view is there will never be another new refinery built in the United States.”

This spring, Democrats knew they had no choice but to finally acknowledge soaring gasoline prices. To divert attention from their out-of-control spending and radical energy agenda, they’ve offered messaging bills, tried to tie high gasoline prices to Russia’s war in Ukraine, and are now blaming American energy producers for “price gouging.” But when it comes to diesel, Democrats aren’t even pretending to care. Even as businesses struggle, the left is continuing to pursue its reckless tax and spend spree that would pump even more government money into the economy and push inflation higher. Democrats’ Green New Deal wish list would mean higher energy costs for consumers and businesses.