Surging diesel prices driven by the Middle East conflict squeezed profit margins for American truckers and agricultural operators, threatening retail goods nationwide.
Record Diesel Prices Pinch Truckers and Squeeze Profit Margins
The national average for on-highway diesel hit $6.529 a gallon for the week of September 21, according to federal government pump survey data, eclipsing the previous June 2022 peak of about $5.81 by more than 70 cents as reported by The Auto Wire. American truckers are facing intense financial pressure as fuel costs climb across the country. Although diesel has since eased to $6.199, it remains roughly $2.49 above where it stood a year earlier.
In California, Fresno-based operator Jagroop Singh Deol noted that filling a full tank now costs more than $1,600, up from $1,000 at the start of the year as detailed by the Los Angeles Times.
According to data from AAA, national diesel prices surged past $6.32 per gallon, driven by disruptions from the Iran war that curbed oil supplies flowing through the Middle East and damaged refining infrastructure. The conflict choked off a major share of oil traffic through the Strait of Hormuz, a narrow shipping lane handling roughly a fifth of the world’s oil supply. Because diesel is refined from crude, the loss of oil traffic caused its prices to spike faster than those of gasoline. Trade routes are largely fixed, meaning freight businesses cannot reduce travel distances to save on fuel, leaving them with high input costs that are passed along the supply chain.
Economists note that the high fuel costs also mirror a similar crunch experienced in 2022 under former President Joe Biden, when the economic fallout from the pandemic and Russia’s invasion of Ukraine drove diesel to a then-record national average of $5.82 per gallon in June. Data from the American Transportation Research Institute showed that trucking fuel costs surged 53.7% in 2022, pushing overall operating costs up by 21.3% to a then-record $2.25 per mile.
Small Fleets and Independent Operators Face Rising Bankruptcies
At least eight transportation-related companies filed for Chapter 11 protection in September alone, while overall figures indicate that high diesel costs served as the tipping point for 16 freight operators filing for Chapter 7 or Chapter 11 protection in late August and early September according to reporting from The Drive. The financial strain is pushing vulnerable freight businesses toward insolvency.
Lewie Pugh, executive vice president of the Owner-Operator Independent Drivers Association, noted that while big oil companies have seen their profits nearly double, the sharp increase in diesel costs has quickly eaten up the small margins left for mom-and-pop trucking businesses, which work load to load and often cannot raise their rates during spikes the way larger competitors can.
Federal bankruptcy dockets reflect the pressure. Truckload LLC estimated assets between $100,001 and $500,000 and liabilities of less than $50,000 in the U.S. Bankruptcy Court for the Middle District of Florida. Among the other bankruptcy petitions filed in September were CLJ Transporting Inc., which listed liabilities of $823,161 against $483,205 in assets in Florida on September 9; Pacer Transport Inc., which sought protection in Louisiana on September 4 with liabilities between $1 million and $10 million and under $50,000 in assets; Texas-based Jett Transport & Materials, LLC, which reported roughly $1.32 million in assets and $1.53 million in liabilities on September 10; and Xoco Transport LLC, which estimated both its liabilities and assets to be in the $1 million to $10 million range in Texas on September 16.
Fuel Costs Rise for Corn and Soybean Farmers
Across the nation, agricultural fuel expenditures for corn climbed by 82%—an increase of $18 per acre compared to last year—while soybean expenses grew by 79%, or $11 an acre, as detailed by Purdue University agricultural economist Michael Langemeier. Beyond long-haul freight, the fuel spike is rippling through American agriculture during the critical fall harvest. Tractors and combines across the country rely heavily on diesel, and farmers cannot quickly swap to cheaper alternatives mid-season.
Individual farmers are bearing heavy burdens. In California, crop grower Wayne Gularte saw his fuel costs rise 40% from roughly $5 a gallon to $7, prompting him to put a gas-powered tractor from the 1950s back into service.
The price shocks eventually travel down the supply chain to everyday consumers. Fresh produce, dairy, and meat frequently travel long distances in refrigerated trucks that burn energy to move products and keep them cold. Shipping a truck of lettuce from Salinas, California, to New York costs around $10,000 total, with $4,200 going toward diesel alone, according to industry estimates.
President Donald Trump signed an executive order intended to cut diesel costs and deliver savings reported Fox News. In Iowa, Gov. Kim Reynolds issued a proclamation temporarily suspending state penalties for vehicles using dyed diesel to transport some agricultural products on public roads covered by the Business Record. Texas Governor Greg Abbott similarly declared a statewide disaster over diesel prices to suspend state penalties for vehicles using red-dyed diesel, though federal excise taxes and penalties still apply to highway usage unless the IRS issues separate relief.