Skyrocketing Diesel Costs Hammer America’s Construction Industry

Construction companies are grinding their teeth as exploding diesel costs create headaches at jobsites across America.

Construction companies rely on diesel to fuel trucks and heavy equipment, while fuel costs are also embedded in the thousands of truckloads used to deliver materials and equipment to jobsites. Diesel prices hit yet another record national average of $6.52 per gallon Wednesday, up roughly 29 cents from a week earlier, according to AAA.

“Construction is one of the industries hit hardest by soaring diesel fuel prices,” Kenneth D. Simonson, chief economist for the Associated General Contractors of America (AGC), told the Daily Caller News Foundation.

“Firms and their workers have huge numbers of diesel-powered trucks and offroad equipment,” he said. “Jobsites are often far from home.”

Contractors can seldom pass sudden cost increases along after committing to a project, leaving firms squeezed as expenses rise, according to the AGC.

An Iran and Ukraine war-driven global diesel shortage is expected to persist through the winter as disruptions remove millions of barrels of refined fuel from the global market. U.S. diesel supplies also remain strained, with distillate inventories sitting 13% below the five-year average as of Sept. 11 and American refineries operating at nearly 97% of capacity, according to the Energy Information Administration.

“Rising diesel costs drive up the cost of nearly everything America builds. Every excavator, crane, bulldozer, concrete truck, and piece of heavy equipment on a jobsite costs more to operate when diesel prices rise,” Jason Isaac, CEO of the American Energy Institute, told the DCNF. “Those costs ultimately show up in the price of new homes, roads, factories, warehouses, and infrastructure.”

The mounting pressure on diesel supplies has prompted President Donald Trump to back a ban on U.S. diesel exports. The proposal has divided his administration, however, with Energy Secretary Chris Wright saying Wednesday that an export ban would not work and could ultimately push U.S. prices higher by disrupting refinery operations and global fuel markets, according to Reuters.

“An export ban is another Washington gimmick that ignores the real problem: America needs more refining capacity. California spent decades regulating refineries out of business, and now construction projects across the country are paying the price for policies most Americans never voted for,” Isaac told the DCNF.