Causes & Consequences Of High Diesel Prices
Key Insights:
- The rising cost of diesel is driving record-high inflation.
- Diesel plays a critical role in the global economy because it powers so many industries.
- With the current high diesel prices, trucking and distribution industries will likely begin shifting expenses over to consumers.
Although the question on many consumers’ minds is: when will gas prices start dropping? Many industries are focused on the pump right next to it: diesel. As diesel prices continue to rise, the wider implications fall on global industries that rely on the fuel to power a global economy. E2B: Energy to Business host Daniel Litwin spoke with Michael Wohlfarth, Manager in Opportune LLP’s Process & Technology practice about the ongoing crisis.
Wohlfarth’s career followed an unconventional path in the industry, starting with the U.S. Coast Guard before ending up on the financial and analytical side of the oil and gas industry. He joined Opportune two months ago, excited about what is to come.
“So far, I love it. I get to do what I am passionate about. And the first thing I thought of when I walked through the door was, ‘We need to build out some infographic-type information and diesel is the first thing that I want to do,’” Wohlfarth says.
Joining at a tumultuous time in the industry, Wohlfarth aims to take the data and show it to people in a way that creates a broader understanding. Given the sticker shock fuel prices and record-high inflation, the average American consumer is certainly on edge right now. But there are geopolitical and supply chain disruptions that are causing volatility in the oil and gas industry globally.
Wohlfarth says there are broader implications to the rise of diesel prices that American consumers don’t yet realize.
“Most people are worried about gas prices, but diesel is driving more inflation than you think,” Wohlfarth explains. “Inflation is running close to 9% higher than last year and diesel costs staying high might make prices stay higher even longer with no end in sight.”
Globally, farmers are spending more to operate, the trucking and shipping industries are passing higher diesel costs to retailers (who ultimately pass it to consumers), and even the education and construction sectors will bear the cost of rising diesel prices.
“There’s an even bigger increase in the price of diesel which plays a critical role in the global economy because it powers so many kinds of vehicles and equipment,” Wohlfarth says.
While electric vehicles and renewable energy can help alleviate the rising costs of diesel within these sectors, Wohlfarth shares small tips on maximizing miles during a time of high gasoline and diesel costs.
“You could inflate your tires properly, find the lowest gas prices, drive the speed limit, reduce your load, and maintain your vehicles frequently,” he says.
