Diesel’s $5 return puts a squeeze on trucks, farms and schools

Diesel is back above $5 a gallon in the U.S., and MarketWatch reports that the jump may bite harder than the gasoline prices consumers watch most closely.

Retail diesel averaged more than $5 a gallon on Friday, according to MarketWatch, returning to levels last seen about a month earlier. The price was more than $1.30 higher than in July last year.

The fuel sits inside much of daily American life. Diesel powers heavy trucks, school buses, farm equipment, generators and compressors used to keep produce cold on the way from fields to supermarkets and restaurants.

War and export curbs tighten the market

MarketWatch tied the latest pressure to disruptions in global energy flows, including the U.S. war with Iran and Russia’s ban on diesel exports through at least the end of July.

The U.S. military said Friday it had shelled Iranian targets for a seventh straight day, and President Donald Trump said last week that an interim peace deal between the countries was over, according to MarketWatch.

The conflict has complicated shipments of Middle Eastern crude through the Strait of Hormuz. MarketWatch reported that refiners in Asia, which previously used much of the region’s medium sour crude, have been turning to U.S. light sweet crude, a grade that produces more gasoline and less diesel.

Russia’s export halt has added another squeeze. Robin Mills, chief executive of Dubai consultancy Qamar Energy, told MarketWatch that Russia exported about 800,000 barrels a day of diesel last year, but that shipments had fallen to about 234,000 barrels a day earlier this month after Ukrainian attacks on refineries.

Russia had been a major supplier to Turkey, Brazil and other buyers in Latin America and Africa. Mills said those importers have turned heavily toward U.S. diesel, helping lift prices inside the U.S.

Matt Smith, an oil analyst at Kpler, told MarketWatch that lower refinery runs, reduced activity in China and crude-quality issues have all played a role. He said U.S. fuel exports, including diesel, gasoline and propane, have been running at record levels because overseas buyers are willing to pay.

Smith said diesel works its way into inflation differently from gasoline. Gasoline shows up directly in consumer prices, while diesel becomes a cost that moves through the price of shipped goods.

Farmers feel the squeeze next

Agriculture is exposed on several fronts. Ricky Volpe, a professor in California Polytechnic State University’s agribusiness department and a former U.S. Department of Agriculture economist, told MarketWatch that fuel, fertilizer and chemicals make up about 15% of a farm’s operating expenses.

Volpe said higher energy and fertilizer costs have already helped push up some supermarket prices, including tomatoes and lettuce in 2026. Fruit and vegetable growers often pass cost increases quickly to buyers and distributors, he said.

For commodity crops such as corn, wheat and soybeans, Volpe said the effect can take longer. Many crops were planted before the latest cost increases gathered pace, and he said the higher bills may show up around harvest in the fall, early winter and into 2027.

Volpe also told MarketWatch that U.S. food-price inflation is already running above average this year because of tariffs and severe weather in major growing regions around the world.

Schools look for an exit ramp

Los Angeles Unified School District, the second-largest school system in the country, told MarketWatch that diesel prices are putting “real pressure” on its budget.

The district has about 120 diesel buses, 36 diesel trucks and vehicles, and roughly 220 pieces of diesel-powered equipment, according to MarketWatch. A spokesperson said the district is investing in electric buses as a long-term cost strategy.

MarketWatch reported that switching one diesel bus to electric can save between $73,000 and $173,000 over its lifetime in fuel and maintenance, while also reducing emissions.

Diesel’s national average reached a record $5.82 a gallon in June 2022 after Russia’s invasion of Ukraine shook energy markets, according to MarketWatch. The latest move has not reached that mark, but the fuel’s reach across freight, food and public services makes its climb hard to ignore.

This story draws on original reporting from MarketWatch.