Surged by 1/3 in a Month! U.S. Diesel Approaches $5 per Gallon, Pushing Up Transportation and Agricultural Costs

The retail price of diesel in the United States has surged by over one-third in the past month, putting pressure on transportation and agricultural production costs. As the Trump administration responds to the cost of living crisis, another economic risk has emerged.

According to data from the American Automobile Association (AAA), on Monday, March 16, the nationwide average price of diesel rose to $4.99 per gallon, up 37% from a month earlier, reaching the highest level since the Russia-Ukraine conflict in 2022.

Diesel is a key fuel for industrial operations, and its soaring prices have a chain reaction affecting truckers, farmers, and ordinary consumers. Houston University energy economist Ed Hirs bluntly states:

Diesel costs rise very quickly, but fall very slowly. The only thing the Trump administration can do is to end this conflict as soon as possible.

The immediate trigger for this price increase was U.S.-Israel actions against Iran, which destabilized the Middle East, leading to the blockade of the Strait of Hormuz and constricting global energy supplies. Analysts believe that short-term price declines are unlikely.

Truck Transportation Bears the Brunt

The transportation industry feels the most direct impact.

Kareem Miller, CEO of Strong Pact Trucking, says:

Rising fuel prices are terrible because everyone will bear higher costs, and prices for groceries, building materials, and other goods will go up accordingly.

Miller states that his company’s three trucks consume about 100 gallons of diesel daily, and the rising fuel prices have added roughly $750 in weekly costs. He also notes that large transportation companies can pass on costs through automatic surcharge fees, but smaller carriers often lack this option, making their situation more vulnerable.

Agricultural Production During Spring Planting Gets Worse

This round of oil price shocks coincides with the start of spring planting in the Western Hemisphere, when farmers need large amounts of diesel to power tractors, combine harvesters, and pumps. Livestock farming is also particularly vulnerable due to heavy reliance on diesel-powered transportation.

USDA data shows that in 2024, American farmers will spend nearly $10 billion on diesel, accounting for about 2% of total production expenses.

Montana rancher Walter Schweitzer says that before this crisis erupted, agricultural production costs had already been rising steadily. Coupled with tariffs impacting export markets, the number of farm bankruptcies in 2025 is projected to increase by 46% compared to the previous year. He adds:

Farmers are struggling to figure out which crops will incur the least losses.

Jed Bower, president of the National Corn Growers Association, points out that rising fuel costs also have a ripple effect on fertilizer prices, which in turn influence farmers’ planting decisions. Bower states:

Farmers have been coping with high fertilizer prices for years, facing sustained high input costs for four years. The uncertainty in the Middle East situation makes this even more complicated, and this year’s corn planting costs are expected to be the second highest in history.

The US Soybean Association sent a letter to Trump on Monday, noting that before the Hormuz Strait blockade, prices for agricultural inputs had already increased by 15% to 95% over five years. After the blockade, the increases further widened, with “the cost for farmers to plant crops higher than ever before.”

Refining Capacity Shortages Amplify Price Pressures

Analysts believe that the US’s insufficient refining capacity is exacerbating the current diesel price surge.

The 132 existing US refineries are generally aging and better suited to process heavy crude from Venezuela and Canada rather than domestic oil, leading to structural supply pressures downstream.

Meanwhile, some refining capacities are shrinking further. Phillips 66 recently shut down its Los Angeles refinery, and Valero Energy plans to close its Benicia refinery in California next month.

Last week, Trump announced plans to build the first large new refinery in the US since 1977, in Brownsville, Texas, but new capacity will take time to come online. Alex Jacquez, a former Biden administration advisor and policy director at Groundwork Collaborative, states:

Our infrastructure is outdated, and the current configuration cannot meet the demand for downstream products domestically.

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