Record Fuel Prices Raise Costs Across U.S.

Fuel prices are surging across the United States, with diesel surpassing $6.20 per gallon nationally, reaching about $6.54 in Michigan and more than $8 in California, while Michigan gasoline averages about $4.75 per gallon and prices are also elevated in other states. Analysts attribute the increases to depleted inventories, refinery problems, seasonal harvest and home-heating demand, Russia’s reduced diesel exports, attacks on energy infrastructure linked to the Russia-Ukraine conflict, and instability affecting Middle Eastern supply routes and shipping through the Strait of Hormuz. Higher costs are squeezing households and fuel-intensive businesses, including farmers, truckers, rail shippers, construction companies and delivery operators; some drivers are reducing travel or using public transportation, while some carriers are cutting service or parking unprofitable vehicles. Rail fuel surcharges have risen to about 48 cents per mile per car, up 153% from a year earlier and accounting for 11% of rail transportation costs for corn and soybeans, while trucking activity and spot rates have softened. Businesses warn that prolonged fuel and transportation costs could lead to higher freight, food and manufactured-goods prices, reduced capacity or shutdowns, adding to inflation and creating a political challenge for the Trump administration ahead of the midterm elections. Analysts say elevated prices and an unusually uncertain freight market could persist for months, with tighter capacity and changing tariffs adding to the risks.