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Record-high diesel prices slam California economy from trucks to crops
Los Angeles Times • • business
Key Points:
- Diesel fuel prices in California have reached record highs, with the state average hitting about $7.71 per gallon, significantly impacting industries reliant on diesel such as agriculture and trucking.
- Small businesses and family farms are struggling to absorb the increased fuel costs, which have risen by around 40% compared to last year, while larger companies can better manage the shock through bulk purchasing and hedging strategies.
- The rise in diesel prices is driving up transportation costs, particularly for perishable goods, contributing to higher grocery prices that disproportionately affect low-income households.
- Supply chain disruptions linked to geopolitical tensions in the Persian Gulf and longer shipping routes around Africa are exacerbating fuel cost increases and logistical challenges in California’s ports.
- Despite short-term pain, some economists suggest that current diesel prices are not unprecedented when adjusted for inflation, and the broader economy is less vulnerable to fuel price shocks due to alternative energy and increased domestic production.
