Gas prices hit an all-time high today at $4.374 per gallon of regular gasoline, just three weeks before Memorial Day weekend. While Americans will feel this pain each time they go to gas up their vehicles, the worst pain point may well be what’s happening with diesel and diesel prices.
The average price of diesel is $5.58 per gallon, and in New York, it has reached $6.282 per gallon. With 86% of all things we eat and wear coming from a truck, according to Phillip Harris of the United Truck Driving School, this is bound to hurt Americans.
And if that’s not enough, well over half of all farm equipment runs on diesel.
Slave to Green New Deal
President Biden wasted no time hitting the first domino on a chain of collapsing energy policies that have brought us to today. Between restricting drilling on federal lands and blocking the completion of the Keystone XL pipeline, the Biden administration signaled exactly where things would be heading.
So why do it? To pander to the progressive Green New Deal team in a dangerous quest to push energy policies that handcuff the industry instead of helping it.
This ideologically driven policy is even, apparently, bound for the military: Read about Biden’s Green Military Here
Unforeseen Repercussion of Ukraine-Russia War
The Ukraine-Russia region is seen as one of the ‘breadbaskets’ of the world. To put that into perspective, the Odessa region of Ukraine, which is currently under attack and experiencing a Russian blockade, is one of the largest suppliers and exporters of wheat, sunflower oil, and fertilizer worldwide.
Putin is targeting Ukraine’s agricultural infrastructure and seizing hundreds of thousands of tons of their grain, putting millions of people worldwide at risk of hunger.
We must immediately eliminate bureaucratic red tape to expedite food aid around the world.
— Joni Ernst (@SenJoniErnst) May 10, 2022
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With grocery store prices already 10% higher than last year and supply chain issues for various goods, including the baby formula shortage, we could quickly be facing a food shortage crisis for the entire world.
Unfortunately, I’m not sure our Vice President has enough capacity to become the Wheat Czar, given the little progress she had made with literally any of her other jobs.
The Problem with Diesel
Most trucks that transport our food, clothing, and other goods across this country run on diesel. Diesel is also the primary fuel used in farming, manufacturing, and mining minerals.
????NEW RECORD HIGH PRICES FOR FUEL???? Retail unleaded and diesel hitting all-time highs today. pic.twitter.com/nXcNZtnMoc
— Dagen McDowell (@dagenmcdowell) May 10, 2022
According to Tom Kloza, head of Global Energy Research at OPIS, whereas a barrel of diesel is sold at $10 above crude oil, it’s now sold at $70 above crude oil.
All this points to higher costs for consumers, whether at the grocery store or the Tesla dealership. Unfortunately, the hard reality is there isn’t enough child labor available in Africa to mine enough cobalt to transition our trucks and heavy farm equipment to electric in time to ease this financial burden.
As for fixes, President Biden told Congress to make oil companies pay fees on idled oil wells and non-producing acres on federal lands, with the idea being that companies would rather put those areas into production rather than pay to sit idle. Oil wells he stalled out when he took office, mind you.
Like most things, there is more to this issue than just drilling. The overall refining capacity in the United States has decreased for numerous reasons. You could argue that the COVID pandemic played a role in this decrease, as it has played a role in just about anything that frustrates this administration.
After all, safety does matter, and some refiners are undergoing routine maintenance checks that were overdue following pandemic shutdowns.
In short, it’s a perfect storm.
The Highs and the Lows
While regular gasoline, diesel, food, and lumber prices have all gone up, some things have gone down. For example, our Stinger and Javelin inventory are mainly down due to our support to Ukraine and supply chain issues. Likewise, inventories of diesel, heating oil and jet fuel have been at the lowest.
The United States isn’t the only country that faces highs and lows. According to Stephen Brennock at Brokerage PVM, the European Union’s possible ban on Russian oil imports will “…have an outsized impact on product markets and especially diesel…there is now growing anxiety that Europe might run out of diesel.”
Suppose the world faces what appears to be a quickly approaching food scarcity crisis. In that case, there is no doubt more dominoes will fall in this crisis, including civil unrest in poorer areas of the world like Africa and the Middle East. Areas that are already generally in a steady state of turmoil.
No Real Solution in Sight
President Biden made remarks today on inflation and provided much the same talking points that we’ve heard since he took office. It’s COVID’s fault; the Republicans don’t have a plan; we need clean energy, and it’s #PutinsPriceHike.
When I lay my head down at night, the last thing on my mind is how the government will make our country more dependent on clean energy.
How can I save money at the grocery store when I have two kids who thankfully are excellent eaters but plow through my weekly grocery stockpile in about three days?
It’s about what we can do at home instead of spending family time out and about so I can save money on gas. Looks like a return to board games for this family. While I enjoy a rousing game of Chutes and Ladders just as much as the next mom, the end of the pandemic meant a chance to get back out and explore this wonderful country and all it has to offer.
According to Yardeni Research, the average American household will pay almost $2,000 more for gas this year with $1,000 more in groceries. That’s $3,000 not paying down debt, not being spent on other goods, not being saved for retirement or school.
THE PERFECT STORM for rising food costs & shortages:
Soaring natural gas prices (used to make fertilizer & dry grain)
Skyrocketing diesel prices (used to run ag equipment)
Disrupted supply chains (lack of ag equip & spare parts)
Labor shortages (lack of ag workers & truckers)
— Brian Gitt (@BrianGitt) May 2, 2022
With 60% of farm equipment in the United States powered by diesel fuel and 96% of large trucks that transport agricultural produce powered by diesel engines and harvest season in September, families like mine will have to start making some cuts to afford necessities like you know…food.