Diesel Prices Set a Record and Squeeze Small Budgets
Diesel averaged $6.23 a gallon across the US on Monday, a fresh record, after Saudi Arabia closed its East-West pipeline and Gulf states put off a scheduled discussion about how the Strait of Hormuz will operate. Brent crude touched $108 during the session and US crude reached $103.
If you do not operate a truck, this can look like somebody else’s problem. It is not. Diesel is the fuel underneath almost every physical thing your business buys or sends, so the cost arrives on your books as a surcharge, a freight line item or a supplier price increase rather than as a fuel bill. Owners already watching the consumer spending slowdown now have a cost problem stacked on top of a demand problem.
The Numbers Behind Monday’s Move
Riyadh took the 746-mile East-West line out of service after drones hit it on Friday, calling the closure precautionary. No reopening date has been offered. Sunday then brought a postponement of the Hormuz discussions, which Tehran said Riyadh had requested.
Traffic through the strait has thinned to almost nothing. MarineTraffic counted 14 vessels on Sunday, 12 on Saturday, 11 on Friday and 9 on Thursday, against normal volumes many times higher.
| Measure | Level |
|---|---|
| US average diesel | $6.23 per gallon |
| US average regular gasoline | $4.31 per gallon |
| Brent crude, intraday high | $108 |
| US crude | $103 |
| Diesel low, late June | $4.77 per gallon |
| Diesel change since that low | Up 30% |
| Diesel change year to date | Up 75% |
| Gasoline change since February 28 | Up more than 45% |
Two separate pressures are doing this. Gulf supply is disrupted, and Ukrainian strikes on Russian refineries have been heavy enough that Moscow blocked exports of the fuel, a restriction due to lapse at the end of September with room to be extended. ING’s commodities team expects the tightness to persist.
How Fuel Costs Reach a Business That Owns No Trucks
Think of diesel as an input to inputs. It moves your inventory to you, moves your product to the customer and moves the food, packaging and raw material your suppliers depend on. Every one of those legs reprices.
Diane Swonk, chief economist at KPMG, told NBC News that this particular fuel works its way into nearly every price in the economy, from running a farm through to anything that gets shipped. She expects that pressure to last months rather than weeks. Carriers respond fastest, because fuel surcharges are designed to adjust weekly, so freight invoices move before supplier invoices do. Anyone who already rebuilt their shipping mix around heavy shipping costs will feel this earlier and, hopefully, less.
A Simple Way to Size Your Own Exposure
You do not need a model. You need one number, and you can find it this afternoon.
Pull your last three months of expenses and add up everything that moves physically: inbound freight, outbound shipping, delivery, fuel reimbursements and any supplier line where transport is a stated component. Divide that by revenue. That percentage is your transport intensity, and it tells you how much of a 30% fuel move actually lands on you.
A business at 3% transport intensity can absorb this quarter. A business at 12% cannot, and needs to act within weeks. Importers have a second layer to check, since the end of the de minimis exemption already changed landed-cost math before fuel did.
Repricing Without Losing the Customer
The instinct is to wait, absorb the hit and hope it passes. That is usually the most expensive option, because it converts a cost problem into a cash problem while you wait.
Small and early beats large and late. A 3% adjustment now reads as housekeeping. A 12% adjustment in January reads as a betrayal, even when the underlying math is identical. Customers accept increases they can see coming, so tell them the reason and give them a date.
Separating shipping from product price also helps. When freight is its own line, the increase is visibly attached to something outside your control, and it can come back down without a second awkward conversation. Check the AAA national fuel averages before each review so the number you quote is current.
Diesel Price Questions Owners Are Asking
How long will this last?
Nobody knows, and be suspicious of anyone who says otherwise. Swonk expects months, and the Russian export ban expiring in September is the nearest scheduled variable.
Should I lock in a fuel surcharge with my carrier?
It depends on your volume. Fixed surcharges protect you if prices climb further and cost you if they fall, so size that bet against how much certainty your cash flow actually needs.
Can I pass all of this through?
Rarely all of it. Plan to recover most of the increase through price and the rest through packaging weight, order minimums or consolidated delivery schedules.
Rising fuel is not a crisis for most small businesses. It becomes one only when owners wait three quarters to reprice.
