Diesel Fuel Prices Could Keep Rising Without Geopolitical Changes

As diesel fuel prices continue to climb, reaching $6.28 per gallon this week, experts warn that without geopolitical changes, the prices of heating oil and diesel could keep rising.

Gregory D. DeYong, an associate professor of operations management at SIU Carbondale's College of Business and Analytics, notes that even though the United States is a net exporter of diesel fuel, global market disruptions have driven up prices.

DeYong explains that the global crude oil deficit is based on two factors: drone attacks on Russian refineries in the war between Ukraine and Russia, coupled with shipping paralysis in the Red Sea and Strait of Hormuz in the war with Iran. Additionally, refining physics play a role, as 45-50% of a crude barrel automatically becomes gasoline, while roughly 25% becomes diesel fuel or petroleum distillate.

The professor warns that the rising costs will have far-reaching effects on consumers, particularly in the Northeast and Midwest where millions rely on heating oil for warmth during winter. He also notes that the current freight cost crisis may expand into a widespread consumer burden as cooler fall and winter weather approaches.