US diesel hits record $5.25 a gallon after Russia invades Ukraine
The U.S. average diesel price jumped 40.1 cents in one week to a record in mid-March 2022, the fastest three-week climb in federal data.
In March 2022, the U.S. average price of on-highway diesel reached a record $5.25 a gallon. Energy Information Administration data released March 14 showed a one-week jump of 40.1 cents.
The price was up $1.146 in just two weeks and $2.059 from a year earlier. Before the week of March 7, the record had been $4.764, set in July 2008.
The fastest climb on record
EIA said diesel rose 29% in three weeks, from $4.06 on Feb. 21 to $5.25 on March 14. That was the fastest three-week increase in its data, which go back to 1994. The 18% rise from Feb. 28 to March 7 alone beat the previous largest weekly increase, 12% in October 2005.
The jump followed Russia's invasion of Ukraine on Feb. 24. EIA noted that Russia is a major exporter of distillate fuel to Europe, and the risk of lower Russian exports tightened the global market. U.S. distillate inventories were already 17% below their five-year average as of March 11.
Prices had been climbing before the war. EIA said strong trucking demand, tied in part to port congestion, had kept diesel demand high. The national average passed $4 a gallon on Feb. 14, 2022.
Prices rose in all 10 regions EIA tracks. California was highest at $6.264, up 50.5 cents in a week. The Lower Atlantic region rose 34.5 cents to $5.264. Regular gasoline averaged $4.315, up 21.3 cents.
Policy responses
Several states looked at suspending fuel taxes. They included Maryland, which weighed a 30-day suspension of its 37-cent tax, and Florida, which also looked at a 30-day break. At least 17 other states were considering similar steps. In Congress, two Democratic senators, Mark Kelly of Arizona and Maggie Hassan of New Hampshire, introduced a bill to suspend the 18.4-cent-a-gallon federal gas tax until 2023.
The U.S. had cut off imports of Russian oil. West Texas Intermediate crude hit $130.50 earlier in March before closing just under $100 a barrel on March 14.
What it meant for carriers
Fuel is one of the largest costs in trucking, and the spike hit carriers on the spot market hardest, since contract loads usually carry fuel surcharges.
Bill Wettstein, chief financial officer at Nussbaum Transportation, told Transport Topics the company was watching prices closely and making sure its freight carried an acceptable fuel surcharge. The 490-truck carrier did about 15% of its business on the spot market. Fuel made up 14% of its monthly spending, second only to salaries and benefits.