Record diesel prices in the US could raise food costs — MarketWatch
In the United States, the average price of diesel fuel on Thursday approached a record $5.98 per gallon, while gasoline neared $4.27 per gallon. Rising fuel costs could affect not only drivers' expenses but also prices for food, freight transportation and home heating, MarketWatch reports.
According to AAA, gasoline has risen by more than 25 cents per gallon over the past month. A year ago, its average price was $3.19 per gallon, while diesel cost about $3.70. Oil prices remained above $100 per barrel at the same time.
Impact on food
Raymond James senior investment strategist Pavel Molchanov linked rising energy prices to heightened tensions in the Middle East and the ongoing conflict between the United States and Iran. In his assessment, even if the war ends quickly, oil will remain more expensive than it was last year for at least one to two months. He also considers it likely that prices at gas stations will be higher year-on-year through December.
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Diesel is used by trucks, freight trains and agricultural machinery. Phil Lempert, editor of SupermarketGuru.com, noted that fuel costs can account for 15% to 30% of the cost of some products. In his view, vegetables, meat and other perishable goods transported in refrigerated vehicles may be affected by price increases the fastest.
Heating and travel
According to the National Energy Assistance Directors Association, heating a home with heating oil during the coming winter season could cost nearly $2,500. The organization made its forecast of a heating-oil price of about $5.55 per gallon at the end of August, when the retail price of diesel stood at $5.45 per gallon. Last winter, the average household heating-oil price was about $3.98 per gallon.
About 4% of US households use heating oil as their primary source of heat, mainly in cold-climate regions in the Midwest and New England. INRIX data also showed that in August, drivers in California, Indiana, Minnesota and Washington state made fewer trips overall than a year earlier. INRIX analyst Bob Pishue noted that it is difficult to determine how much this is specifically related to fuel prices, as demand for fuel is relatively inelastic.
