While much of the media focus has been on rising US gasoline pump prices (which are still way below prices in other countries, but that's a blog for a different day), retail diesel prices have soared far above gasoline.
On February 11, the price of regular gasoline was $3.19/gal and diesel was $3.28/gal. One month later, on March 10, diesel has surged to $3.82/gal while gasoline only rose to $3.39/gal.
While diesel gets fewer headlines because most cars in the US run on gasoline, the impact of a tight diesel market is being felt in the economy in the form of higher inflation.
According to the latest Producer Price Index figures for February, released Tuesday by the Bureau of Labor Statistics, truck transportation costs were up 0.7% from January, and up 4.7% year-over-year. Rail transportation, while slipping 0.5% month-over-month, has surged 11.3% in the past 12 months. Water transportation, meanwhile, rose 1.9% in February, and 8.4% from February 2007.
With diesel fuel up 48.2% year-over-year, it's clear that transportation companies have not pushed through the full extent of the cost increase. But inflation appears to be leaking through; it's just a question of whether a leak becomes a flood.
For more information on on the high price of diesel, listen to a related podcast with Andy Lipow, President of Lipow Oil Associates.
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