The surge in gas and diesel prices not only adds to inflationary pressures that have raised recession fears, but has also directly affected the agriculture industry.
The national average prices for regular gasoline and diesel in the United States both climbed to fresh record highs on Tuesday.
According to the American Automobile Association (AAA), which provides the latest gas price analysis based on data from 130,000 gas stations nationwide, the regular gas price rose four cents on Tuesday to US$4.37 a gallon, overtaking the prior record of US$4.33 on March 11. Diesel prices hit a record, with the national average price now US$5.55 per gallon, up 23 cents from last week, when the most recent record was set.
The increase is primarily due to the high cost of crude oil, which was hovering near US$100 a barrel last week and is now closing in on US$110, the AAA said, adding "with the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline."
The surge in gas and diesel prices not only adds to inflationary pressures that have raised recession fears, rocked financial markets and soured Americans' views on the economy but has also directly affected the agriculture industry.
Agweb, a U.S. agriculture news website, said that farmers are now reporting higher farm diesel prices than on-road diesel, which is typically not the case.
Farmers already face a shortage of equipment parts, tires and some crop inputs, the report said, adding due to increased demand and a drop in production, a diesel shortage may be a huge blow. Peter Meyer with S&P Global Commodity Insights said certain areas of the country had seen shortages of diesel, with prices expected to rise higher.
"Supplies at New York Harbor, a hub for diesel distribution, are at a 30-year low. As such, the East Coast of the U.S. has been hit especially hard, resulting in diesel prices above US$6.00 per gallon in that area, well over the equivalent of US$250 per barrel," Meyer added.