How record diesel prices will rip through the U. S. economy. Trucks, rails are only the start

How record diesel prices will rip through the U. S. economy. Trucks, rails are only the start. S. economy's "single most universal tangible input" and that means what starts with truckers and railroads will ultimately hit consumers if record prices persist.

What happened

"Higher diesel prices will spread across the economy, with consumers facing higher costs for ordinary goods delivered by trucks and services like home improvement," he added, noting the last PPI report showed pressure in a broad array of items from packaging to circuit boards. Record diesel prices are already walloping the transportation sector, and if energy prices stay high, the economic impact will spread. The list of impacted goods and services will only grow the longer diesel stays high, with grocery prices, delivery fees, and anything seasonal likely to experience price impacts.

Economists and supply chain experts say what starts in the transportation sector, where trucking and rail companies are feeling the pain now — will eventually push prices on virtually everything in the economy up. Hunt CFO Brad Delco said the company has seen "some of the most radical and abnormal swings" in fuel prices that it has ever seen and record-high diesel prices, which are causing at least a $10 million headwind. While unleaded gas prices have largely avoided historic highs, the same can't be said for diesel fuel, which hit an all-time high of $6.

This is not surprising, because diesel is the economy's single most universal tangible input, said David Russell, global head of market strategy at TradeStation Group.

The wider picture

The first to feel it are freight haulers, but there will be plenty of other losers — consumers and companies — if diesel remains at record price levels. And then the chips, soda, and doughnuts inside your favorite convenience store also have to get there — by diesel-powered trucks — so the pain from the pump seeps into the store because getting the items there is costing a lot more. It can take awhile for the diesel cost to work its way through the economy and into your bank account.

"The list of impacted goods and services will only grow the longer diesel stays high," Russell said. Heating oil costs this winter could surgeHome heating oil, used extensively in the Northeast to heat homes, tracks closely with diesel prices since they are made from the same ingredients. "Families are going to get hit three ways: heating oil, and then everyone will get hit with high gas prices, and delivery on everything is dependent on diesel, so regular, everyday families will really struggle," Wolfe said.

It has gotten expensive enough that families will not be able to afford fuel without significant sacrifices," Wolfe said. watch nowVIDEO3:3003:30Higher diesel prices will be a secret killer of the U. Why diesel prices are so high, and why it will be hard to lower themJack Buffington, associate professor in supply chain management at the University of Denver, said that while oil prices have largely been held in check, diesel prices are exploding not because of the rise in crude oil prices as supply has been pressured but due to a lack of global refining capacity.

What has been reported

But even if conflicts around the world stopped today, prices would not start sinking significantly. "Some believe, incorrectly, that once the kinetic fighting stops that diesel prices will fall, but that's not the case due to net refining capacity," Buffington said, adding it could take a year or longer for prices to return to the $4 level. Blough said farmers will be clocked by the high prices because of the high use of diesel to transport fertilizers and crops and operate tractors and combines.

Railroads might get more business because they are cheaper than trucks, but they also stand to lose business if the economy slows at a broader level. " For diesel prices headed into this winter, much depends on how long the Strait of Hormuz disruption and the Russian refinery issues persist. Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuKey PointsDiesel fuel is considered to be the U. In this articleJBHTFollow your favorite stocksCREATE FREE ACCOUNTThe current price of diesel fuel is shown in Encinitas, California, U.

Mike Blake | ReutersEver since the outbreak of war with Iran earlier this year, motorists have been warily eyeing prices at the pump.

What happens next

The chief commercial officer for Norfolk Southern railroad noted at a Morgan Stanley conference on Tuesday that in California, the price of diesel was already $8. Consumers are getting a taste of what could come next in the form of already higher prices at the gas pump. What is driving up gas prices right now isn't just the price of oil, said Jeff Lenard, vice president of media and strategic communications at the National Association of Convenience Stores.

"The higher transit costs are adding several additional cents to the cost of selling fuel – as do swipe fees that are percentage based and increase as prices increase," Lenard said. "Right now, they are absorbing the bulk of the costs, which typically happens when wholesale prices and costs increase dramatically. Carmit Glik, CEO of Ship4wd, an all-in-one digital freight forwarder and subsidiary of Israeli shipping giant ZIM, said that diesel is the price nobody watches until it's already inside everything else.

"It shows up in grocery prices, delivery fees, and anything seasonal that depends on trucking to move fast, usually a few weeks after the spike, once surcharges work their way through the supply chain.