On Tuesday, Politico warned of a “sleeper issue” caused by President Donald Trump’s war on Iran that is going largely under-discussed but has the potential to cause major “economic pain.” As the outlet explained, “the rise in the cost of the fuel used for trucking, agriculture and winter heating is worse than the jump in gasoline,” and it’s a looming problem for the country that could blow up Republican midterm chances once and for all.
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“Republicans have been facing a problem with voters over high gasoline prices for months — but the economic pain from near-record diesel fuel prices looks set to hit at the worst possible time for them,” wrote Politico. “The war in Iran, disruptions in Russian production and refining bottlenecks have sent the price of diesel fuel rising faster than that of gasoline or crude oil, and it’s now grinding toward an all-time record just two months ahead of the midterms. That matters for Republicans in particular because diesel prices hit first — and hardest — in rural areas and affect blue-collar businesses like farming and trucking before spreading to suburban dinner tables and the rest of the economy.”
As of Monday, the average price of diesel was $5.60 per gallon, an increase of about $1 from early July and almost $2 higher than a year ago. The all-time U.S. record $5.816 set in June 2022 is approaching fast, “and with U.S. inventories at their lowest-ever levels going into the peak diesel demand season, little relief is likely.”
“That shortage will be acutely felt by the farmers during the harvest, and so the inflationary consequences can be greater at harvest time,” said Kevin Book, managing director at consulting firm ClearView Energy Partners. And as Politico explains, “At the same time, products will be on trucks headed to stores for the holidays, and many voters in places like Maine and Alaska will be preparing for winter by buying heating oil, which, like jet fuel, is similar to diesel.” According to Book, “There is a very strong history of caring about heating oil ahead of elections.”
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And when you factor in the shortage of truck drivers, said Dean Croke, principal analyst at DAT Freight & Analytics, the cost of diesel becomes the “sleeper issue” of the economic problems rocking the Republican midterms. “We’ve never seen this,” Croke explained. “What you’re seeing is a real squeeze going on right now.” As Politico noted, “That squeeze suggests the affordability issue is going to get worse for Trump and congressional Republicans as they face inflation-weary voters in midterm elections. A POLITICO poll conducted earlier this month found a solid majority of Americans believe the Iran war, launched by Trump six months ago, has made things more expensive for their families.”
According to Politico, American refineries “are running at full tilt to make up the balance. Refineries operated at 97.4 percent of their operable capacity last week. API said U.S. refiners produced more diesel this July than in any July on record. Now, some refineries are even delaying regular seasonal maintenance, raising the chances of an accident that could deliver an outsize price shock. And a strong hurricane churning toward the Gulf Coast could trigger the shutdown of numerous facilities in the world’s largest refining hub.”
In the face of these and other uncertainties, “the prospect of fuel shortages is growing by the day. And the Trump administration doesn’t have many more tools at its disposal, having ruled out limits on petroleum exports.” But as Politico noted, there is one solution that may be approaching, but that no one wants. “The fastest road to a lower price,” warned Book, “could be a recession.”
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