Ask the expert: What’s ahead for fuel, food and fall harvest

Fuel prices have surged to some of the highest levels on record. As of late-September, the national average for regular gasoline stood at about $4.48 per gallon, more than a dollar higher than a year ago, according to AAA. Diesel has moved even faster, hitting an all-time record of $6.53 per gallon nationally, more than 70% higher than a year earlier. Michigan set its own diesel record this week at $6.89, and the increases are arriving just as farmers across the state head into the fall harvest.

David Ortega, the Noel W. Stuckman Chair in Food Economics and Policy at Michigan State University, explains what is behind the run-up in fuel prices, why diesel matters so much for agriculture and the food supply, and what would need to happen for prices to come down.

Fuel prices have been climbing recently. What is driving this?

The short answer is war and refining capacity. Since late February, the conflict with Iran has severely disrupted tanker traffic through the Strait of Hormuz, a passage that normally handles about one fifth of the oil the world uses each day. Attacks on refineries and export infrastructure in the Persian Gulf, along with strikes on Russian refineries in the Russia-Ukraine war, have taken offline a significant amount of capacity. Russia has banned diesel exports, and Red Sea shipping has been disrupted as well.

This is why the situation is different from a typical oil price spike. Even when crude oil is available, the world has lost a meaningful share of its ability to turn that crude into finished refined fuels like gasoline and diesel. And there is little slack left domestically to make up the difference. U.S. refineries are running at roughly 94% of capacity. Meanwhile, U.S. diesel inventories are running about 12% below their five-year average. Crude prices hovering around $100 per barrel are only part of the story.

Why does diesel matter so much beyond the truck stop?

Diesel is the workhorse fuel of the economy. Semitrucks, freight trains, barges and farm machinery run on it. Most consumers never buy a gallon of diesel, but almost everything they do buy moved on diesel at some point, often several times, between production and the store shelf.

The impact is largest for products that are heavy relative to their value, where freight makes up a big share of the final price. When diesel costs jump, trucking firms and railroads pass those costs along through fuel surcharges, and those surcharges eventually reach store shelves.

Which goods and services will consumers feel this in most?

Agricultural commodities and food are near the top of the list. Fresh produce, dairy and meat often travel long distances in refrigerated trucks that burn energy both to move and to keep products cold. Fuel costs are built into every step of the food supply chain, from hauling grain and livestock to processing, distribution and final delivery, so sustained diesel increases eventually reach the grocery store. Anything delivered to your door is affected too since carriers add fuel surcharges that flow into shipping costs for households and businesses alike.

Heavy, low value products are especially exposed because transportation is a large share of what you pay for them. Building materials are another example, as they are expensive to move relative to their price. The same logic applies to bottled beverages, canned goods, appliances and other bulky items.

Finally, this reaches beyond diesel itself. Diesel, jet fuel and heating oil are closely linked products, so a broad supply squeeze can also raise aviation and heating-fuel costs. Heating demand ramps up just as harvest winds down, which is one reason fuel markets are likely to stay tight in the coming months.

What does this mean for farmers right now?

The timing could hardly be worse. We are in the heart of fall harvest, when combines, tractors, grain carts and trucks run long hours moving crops from fields to storage and elevators. Unlike some expenses and activities, harvest cannot be postponed. A crop has to come out of the field regardless of what fuel costs, so farmers largely have to absorb the increase. Fuel also shows up indirectly through fertilizer delivery, custom harvesting, livestock hauling and the freight charges built into nearly every input. This lands on operations that were already managing tight margins after several years of elevated costs for fertilizer, seed, chemicals and equipment. For many farms, fuel will be one of the defining costs of 2026 profitability.

Will this show up in grocery prices?

Yes, though it takes time and increases will be moderate, and understanding why helps explain what consumers will see over the next several months. Early on, much of the cost increase gets absorbed along the supply chain through existing freight contracts and retailer margins. But as contracts reprice and fuel surcharges take hold, more of that cost makes its way to the grocery store. The same dynamic applies to other products that move by truck and rail, which is why the full effect of record diesel prices is still ahead of us even if fuel prices stopped rising today. That said, fuel is a single digit share of overall food costs at retail, so I do not expect major spikes at the grocery store. But these pressures come on top of several years of elevated food prices, and they fall hardest on low-income households who spend a larger share of their income on food.

I would also caution consumers about expecting food prices to fall rapidly once fuel costs ease. Food prices are downward sticky. They rise quickly when costs go up but rarely decline in a sustained way. The more realistic hope is that the pace of increase slows, not that prices return to where they were.

When is this going to end? What would need to happen for prices to come down?

The honest answer is that no one can say with certainty, but we know what recovery requires. Two things have to happen. First, shipping through the Strait of Hormuz and the Red Sea needs to return to something like normal so crude and refined fuels can reach world markets. Second, and this is the part that takes longer, damaged refining capacity has to be repaired or replaced. Refineries are complex facilities, and rebuilding lost capacity takes time.

The president has said fuel prices will fall right after the November election. What does the election have to do with it? And would an export ban on diesel help?

There is no switch that flips on Election Day. Fuel prices are set by global supply and demand. Even a swift end to the conflict would not restore refining capacity overnight. If shipping lanes reopen, crude prices would likely fall. But diesel relief would take longer because the refining shortfall persists. Consumers and businesses are better served planning around those physical realities than around any specific date.

An export ban won’t fix high diesel prices. It might lower them briefly by keeping exported barrels at home. But it creates no new fuel. It pulls supply out of an already tight global market, and refiners who lose their export outlets could respond by processing less crude. This would lead to higher prices down the road.

What’s the bottom line?

Fuel prices, and diesel in particular, are at historic highs because war-related disruptions have taken a large share of global shipping and refining capacity out of service at the same time. Those costs land first on the people who can least avoid them, including farmers in the middle of harvest and the trucking firms that move everything we buy. Over the coming months, they will continue working into food, construction and consumer prices. Relief will come when shipping and refining recover, and that timeline remains genuinely uncertain. Households and businesses should plan for elevated fuel costs in the coming months and be wary of any promise that prices will drop on a particular date.