Diesel could be the tipping point for US economy

Knight-Swift Transportation Holdings

22/09/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran
NEW YORK, Sept 21 (Reuters Breakingviews) - The US is over a barrel. Already the biggest oil producer in the world, it can't turn out more diesel. Prices for the fuel used mostly by truckers and freight have risen about twice as fast as gasoline pumped into autos since the start of the Iran conflict in February. The circumstances are sure to inflict far more pain on the nation’s economy. 
Citizens have spent an additional $112 billion at gas stations since the start of the war according to a running estimation by Brown University researchers. Yet diesel accounts for $51 billion, despite drivers pumping a lot less of it. About 80% of the country's diesel, or around 3 million barrels a day, is used for transport. Gasoline consumption is nearly 9 million barrels a day.
The problem is refining. The spread earned from producing it from crude is at a record, so companies like Marathon Petroleum MPC.N and Valero Energy VLO.N are earning bumper profit. Yet US facilities are operating at 97% capacity. The last refinery was built about 50 years ago. Considering a new one can take a decade to complete and domestic fuel demand peaked years ago, no reinforcements are coming. High prices also provide temptation to postpone maintenance, which can cause longer shutdowns.
The US is the largest exporter of diesel, which prompted majority Senate leader John Thune to mull last week on whether these sales should be banned. On Saturday, Iowa Senator Chuck Grassley called for one. The Trump administration shot down the idea, at least for now, saying it probably wouldn’t lower prices, but cause retaliation. That would lead the overall system, which has too little refining capacity worldwide, to operate less efficiently.  
Diesel users have little choice but to pay higher prices, and freight companies have thin margins. Knight-Swift Transportation KNX.N, a big trucker, had a 6% operating margin last quarter. The average total cost to run a truck in 2025 was $2.34 per mile last year according to American Transportation Research Institute. Fuel price rises are therefore passed onto customers. Assume 6 miles to a gallon, and the difference of $2.81 in the price of diesel a year ago to Monday means an extra 47 cents per mile, most likely at a shopper's expense. 
This will hurt retail, manufacturing, farmers and consumer goods companies. Amazon.com AMZN.O, for example, spent $27.9 billion on shipping last quarter — more than earned in operating profit for the retail division. 
The US economy has proven surprisingly resilient to the oil shock, but the costs related to moving things around could be the tipping point. 
     
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CONTEXT NEWS
US Senate Republican leader John Thune said on September 15 that he is open to exploring an export ban on diesel. Iowa Senator Chuck Grassley called for a ban on September 19.
The national average price of a gallon of diesel was $6.51 on September 21 according to the American Automobile Association, or 76% more than one year ago. The retail price for gasoline has risen 41% over the last year, to $4.48.

(Editing by Jennifer Saba; Production by Maya Nandhini)
((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))