A one-third surge in a month! U.S. diesel nears $5 per gallon, driving up transportation and agricultural costs

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U.S. diesel retail prices have surged by more than a third in the past month, putting pressure on costs from freight to agricultural production. As the Trump administration responds to the crisis of living costs, another economic risk has emerged.

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

Diesel is a key fuel for industrial operations, and its price surge has a ripple effect on trucking companies, farmers, and ordinary consumers. Ed Hirs, an energy economist at the University of Houston, stated:

Diesel prices rise quickly but fall slowly. What the Trump administration can do is to end this conflict as soon as possible.

The immediate trigger for this price spike is the instability in the Middle East caused by U.S. and Israeli actions against Iran, leading to the closure of the Strait of Hormuz and choking global energy supplies. Analysts believe prices are unlikely to retreat in the short term.

Trucking Industry Takes the First Hit

The pressure felt by the transport industry is most direct.

Strong Pact Trucking CEO Kareem Miller said:

The rise in fuel prices is terrible because everyone will bear higher costs, and prices for groceries, building materials, and all kinds of goods will go up accordingly.

Miller said that his company's three trucks consume about 100 gallons of diesel daily, and the price increase has resulted in an extra weekly burden of about $750. He also pointed out that large transport companies can pass on costs via automatic surcharges, but smaller carriers often do not have this option, making their situation more passive.

Spring Planting Season Adds to Agricultural Woes

The current fuel price shock coincides with the start of spring planting season in the Western Hemisphere, when farmers need large amounts of diesel to power tractors, combines, and pumps. Livestock farms, which rely heavily on diesel for transport, are particularly vulnerable.

U.S. Department of Agriculture data shows that in 2024, American farmers' spending on diesel is close to $10 billion, accounting for about 2% of total production expenses.

Montana rancher Walter Schweitzer said that even before this crisis, agricultural production costs had been rising, and combined with tariffs impacting export markets, agricultural bankruptcies in 2025 are up 46% compared to last year. He added:

Farmers are struggling to calculate which crops will lose them the least money.

National Corn Growers Association President Jed Bower noted that rising fuel costs also affect fertilizer prices, influencing farmers' planting decisions. Bower said:

Farmers have been coping with high fertilizer prices for years, facing elevated input costs for four straight years. The uncertainty in the Middle East further complicates this situation, and this year's corn planting costs will be the second highest in history.

The American Soybean Association wrote to Trump on Monday, saying that before the Strait of Hormuz blockade, input prices for agriculture had already risen by 15% to 95% over five years. After the blockade, the increase became even greater: "The cost of farming is higher than ever before."

Refinery Capacity Shortfalls Amplify Price Pressure

Analysts believe that the lack of sufficient U.S. refinery capacity is exacerbating the diesel price surge.

America's 132 existing refineries are generally aging and more suited for processing heavy crude from Venezuela and Canada, rather than domestic crude, causing structural pressure in downstream supply.

At the same time, some refining capacity is shrinking further. Phillips 66 recently closed its Los Angeles refinery, and Valero Energy plans to shut its Benicia refinery in California next month.

Trump announced last week that a major new refinery project will be built in Brownsville, Texas—the first such project in the U.S. since 1977—but new capacity will take time to come online. Alex Jacquez, former Biden administration advisor and policy advocacy director at Groundwork Collaborative, stated:

Our infrastructure is old, and the current setup cannot meet the domestic demand for downstream products.

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