Diesel prices climbed to an average of $6.32 per gallon on Tuesday, up from $3.76 per gallon on Feb. 27. On Friday, the Group of Seven nations agreed to a significant release of diesel reserves to help counter rising fuel costs.

President Donald Trump issued an executive order Monday allowing temporary use of red-dyed diesel for non-farm vehicles, a fuel typically restricted to agricultural operations. The conflict in Iran has driven a 68% increase in diesel prices since its beginning.

The White House authorization for highway use of dyed diesel is effective from October 5, 2026, through December 31, 2026. This type of diesel is generally not sold at standard gas stations or truck stops and is normally limited to off-road machinery. Primary source: whitehouse.gov

"It's going to be another squeeze on the consumer," said Michael Reid, head of U.S. economics at the Royal Bank of Canada. "And it's really the lower- and middle-income consumers who feel it disproportionately."

"Gas is direct: It's coming right out of my pocket into the gas tank," said Mark Zandi, chief economist at Moody's. "Diesel is indirect."

"Anything that's on a truck will be impacted by the higher diesel costs, everything from groceries to whatever you'd get delivered to your front door by UPS or Amazon," he said. Federal government statistics indicate that 70% to 80% of all goods are moved by truckers.

"Cars run on gas, the economy runs on diesel," he said. For each $1 increase in the cost of a gallon of diesel, consumers can expect overall inflation to rise by 0.1 percentage points, assuming higher prices are sustained, according to Zandi.

Diesel prices have risen approximately $2.50 per gallon since the start of the Iran war, which would typically add about 0.25 percentage points to inflation as measured by the personal consumption expenditures price index, according to Zandi. The Federal Reserve's preferred inflation gauge, the PCE index, was running at a 3.4% annual pace as of August.

"It may be a drip over the next few months, where goods prices move higher," said Reid. "And the consumer won't feel it as a one-time shift higher. It'll be ticking up, ticking up, ticking up."

In Utah, diesel prices are averaging $6.45 per gallon, based on AAA estimates. As of Tuesday, average gasoline prices stood at $4.37 per gallon, an increase of about 47% from $2.98 per gallon on Feb. 27.

Economists attribute the surge in diesel prices primarily to the Iran war. Russia's war in Ukraine has also contributed, with Kyiv attacking Russian refineries and Moscow halting diesel exports.

State taxes and fees on diesel averaged 35.5 cents per gallon as of January 2026, according to the U.S. Energy Information Administration. The U.S. Department of Energy reported domestic distillate inventories had declined to 105.2 million barrels by late September 2026, 13% below the previous year’s level. Primary source: whitehouse.gov

Why It Matters

Higher diesel prices impact much of the economy because federal data shows 70% to 80% of goods are transported by truck. Increased transport expenses lead to higher consumer prices, with Goldman Sachs projecting food prices will rise by 0.2 to 0.4 points cumulatively in the months ahead.

Goldman Sachs forecasts diesel prices will remain high through 2027 due to refining capacity limits and strong demand, reflecting structural supply challenges. Domestic distillate inventories fell to 105.2 million barrels by late September 2026, 13% below year-ago levels, underscoring market tightness.

Timeline

The PCE index, the Federal Reserve's primary inflation measure, was increasing at a 3.4% annual rate as of August. Goldman Sachs stated that diesel accounts for roughly 5% to 10% of input costs across crops, on average.

Goldman Sachs projected that diesel prices would stay elevated through 2027. On the same date, the firm reported it expects higher diesel prices to push food prices up by 0.2 to 0.4 points cumulatively over the coming months.

What's New

Updated analysis shows Goldman Sachs has raised its forecast for U.S. diesel crack spreads to $63 per barrel for 2027, more than double the historical average, indicating persistent structural imbalances in diesel supply and pricing. The firm has repeatedly warned of deep-seated issues in global diesel markets, including continued high prices through 2027 due to constrained refining capacity and rising demand.

The official record confirms the average diesel price reached $6.32 per gallon as of the report date. It remains unclear whether the G7’s strategic stock release will successfully reduce diesel prices or if the executive order will offer meaningful relief to truckers and farmers.

Data indicates state taxes and fees on diesel averaged 35.5 cents per gallon as of January 2026, according to the U.S. Energy Information Administration. The G7’s emergency fuel release involves a front-loaded, substantial diesel drawdown within the first 20 days of a four-month period, coordinated by the International Energy Agency (IEA). In 2022, the U.S. Department of Energy noted diesel prices hit a 14-year high of $5.02 per gallon, highlighting past volatility in this sector. Primary sources: whitehouse.gov, whitehouse.gov (2)