Diesel prices up to $3.58/gal as Middle East tensions rise and hurricanes intensify
Fuel prices nationwide experienced ripple effects from various external events—hurricanes, heightened Middle East conflict, East Coast port strikes—over the past week as diesel prices jumped 4 cents, according to the U.S. Energy Information Administration.
According to the government tracker, the national on-highway diesel price average was up to $3.584 per gallon on October 7. While this price is 91 cents less than this time last year, in the short term, diesel prices did rise a few dollars in response to greater conflict in the Middle East, according to Breakthrough’s chief economist, Matt Muenster.
“For diesel prices, I think there's an immediate reaction to the renewed Middle East tension,” Muenster explained. “It’s continued this experience we've had this full calendar year, even going back to last October, since the Israeli-Hamas conflict began. Since that time, we've been in a global energy market that's had two forces countering each other.”
On one hand, a relatively stable global supply of crude oil has helped to slowly bring down oil prices and, by extension, diesel prices. The freight slowdown for most of the last two years has also contributed to this, especially with the slowdown of manufactured products and building supplies in 2024, all of which have lowered the price premium on diesel fuel.
“On the other hand, we've had geopolitical risk that's been elevated going back to last October, and so that recent intensification between Israel and Iran is probably the first thing that grabs attention,” Muenster continued. “I expect it to be a really short-term impact, but there’s always that risk that it proves more disruptive and has a lasting impact on energy prices.”
For the U.S., those competing forces resulted in largely more expensive diesel fuel, at a rate of less than a cent to 6 cents, depending on the region. The EIA noted that the East Coast benefited the most from price drops, if only marginally, with diesel costs falling less than a cent along the East Coast to $3.563 per gallon and 1 and 2 cents, respectively, along the Lower Atlantic and New England subregions to $3.447 and $3.765.
For the regions that saw their diesel costs rise, the Rocky Mountain area fared the best with increases of less than a cent to $3.620 per gallon. After that, California’s costs climbed 2 cents to $4.74, while the West Coast without California rose 4 cents to $3.841. The Gulf Coast saw their costs increase 5 cents to $3.266, while the Midwest fared the worst at 6 cents to $3.587 per gallon. But despite all these shifts, the Gulf Coast remains the cheapest place for diesel at $3.26, while California is the most expensive at $4.74.
See also: Diesel prices inch up to $3.54/gal, as gas remains under $3.20/gal
For once, the AAA motor club‘s current diesel average is 2 cents cheaper than the EIA’s numbers at $3.568. This is less than a cent cheaper than last week’s average of $3.566 but far better than the motor club’s numbers from this time last year, which was 96 cents more expensive at $4.532.
Gasoline less responsive to geopolitical events at $3.136/gal
Unlike the EIA’s diesel prices, gasoline costs barely increased over the past week. Nationwide, gas prices are currently at $3.136, down 4 cents from a week ago and 54 cents from this time last year. Otherwise, prices vacillated from less than a cent to 14 cents across the country, but mainly in the downward direction.
For the few places gas costs did increase, prices rose less than a cent along the Central Atlantic sub-region to $3.182 and up 3 cents along the Gulf Coast to $2.725 per gallon. Meanwhile, along the West Coast, prices dropped less than a cent in California to $4.408, 1 cent along the West Coast overall to $4.027, and 2 cents in the West Coast without California to $3.623. For the rest of the country, the East Coast saw their diesel prices drop 5 cents to $3.009, the Midwest’s fell 6 cents to $3.036, and the Rocky Mountains saw their gas costs drop 14 cents to $3.271.
Despite all this, the Gulf Coast is still the cheapest place for gas, at $2.725 per gallon, while California remains the most expensive, at $4.40.
AAA's gas average is currently at $3.174 per gallon, down 4 cents from last week and 55 cents lower than last year’s average of $3.722.
“Despite the threat of war and a hurricane season that is still percolating, domestic gasoline prices are edging lower,” said Andrew Gross, AAA spokesperson. “There are now 18 states east of the Rockies with averages below $3 a gallon. And OPEC+ is saying, at least for now, they will increase production starting December 1st, putting even more downward pressure on pump prices.”
Will OPEC+ change their mind? Muenster doubts it.
“If the events in the Middle East raise crude oil prices long enough that OPEC feels more comfortable bringing production back, they could choose to do so,” Muenster hypothesized. “[But] It's a fairly short timeline between now and December, so I don't expect them to make a change ahead of their agreed upon timing.”
