U.S. diesel prices remain near record levels despite President Donald Trump’s efforts to increase fuel supplies, as disruptions linked to the wars in Iran and Ukraine continue to tighten the global energy market.
The average U.S. diesel price reached $6.28 per gallon on Friday, according to motorist group AAA. Prices have climbed about 70% since the U.S.-Israeli war on Iran began, putting additional pressure on truckers, farmers and other businesses that depend heavily on diesel.
Energy analysts say the administration’s recent measures are unlikely to bring substantial, lasting relief without a sustained improvement in the global supply situation.
“Aside from a recession that hammers consumption, the only thing that can prevent oil prices from rising further and put them on a sharp downward trajectory is a durable end to conflicts in the Arabian Gulf and between Russia and Ukraine,” said Bob McNally, president of Rapidan Energy Group.
Emergency oil release faces questions
The Trump administration has promoted a Group of Seven agreement to release 100 million barrels of oil and petroleum products as a major effort to ease fuel prices.
However, questions have emerged over how much additional supply the move will actually provide. The release appears largely to cover barrels remaining from an emergency initiative announced by members of the International Energy Agency in March, rather than representing an entirely new commitment.
A White House official disputed that assessment, saying the earlier commitments did not specifically cover refined products. According to the official, the administration negotiated to accelerate the release of previously committed barrels, prioritize diesel and begin deliveries on a tight schedule.
The White House said Trump was working to address temporary supply disruptions while pursuing longer-term energy policies.
Red-dyed diesel plan draws limited interest
Another administration initiative allows red-dyed diesel to be used on public roads through the end of the year.
The fuel is chemically the same as conventional diesel but is dyed red to identify it as fuel exempt from the 24.4-cent-per-gallon federal highway tax, which generally applies to diesel used on public roads.
Trump’s executive order temporarily defers the federal tax and waives penalties for using the off-road fuel on highways. However, major fuel retailers and distributors have been cautious about participating because of uncertainty over tax liabilities, logistical challenges and the potential for fines when trucks cross state lines.
With diesel prices exceeding $6 a gallon, the tax savings may also offer limited relief to motorists and trucking companies.
David Fialkov, who represents truck stops and travel centers through industry group NATSO, said the administration appeared to be encouraging the distribution of dyed diesel through channels not traditionally used to supply highway vehicles. He added that most established retailers and fuel marketers would likely be reluctant to participate.
John Tirado, president of New Jersey-based commercial fuel supplier Summa Energy, described the initiative as “a Band-Aid on a much bigger problem.”
The White House said more than 4,000 retailers distribute dyed diesel and that guidance from the Treasury Department would clarify how drivers could use the fuel without paying the federal tax or facing penalties. The administration argued that the savings could outweigh the cost of detours to obtain it.
Global supply remains the bigger challenge
Energy analysts say the underlying problem is a tight international market for refined petroleum products, driven by disruptions to energy shipments from the Middle East and reduced refining output in other regions.
“The fundamental problem facing the US is not taxation but an exceptionally tight global market for refined products,” said Caspian Conran, lead economist at Baringa.
Conran said the administration’s measures could provide some short-term relief, potentially lasting a few weeks, but would not resolve the broader supply shortage.
Elevated fuel costs also pose a political challenge for Trump and Republicans ahead of the November 3 U.S. midterm elections, as voters continue to identify the cost of living as a major concern.
A Reuters/Ipsos poll found Trump’s approval rating at 32%, a career low according to the report. High diesel prices are particularly significant for farmers, trucking operators and rural communities, groups that have traditionally supported Republicans.
For now, the outlook for diesel prices remains closely tied to developments in the Middle East and Ukraine, with analysts warning that lasting relief will depend largely on easing the conflicts and restoring more stable global fuel supplies.
