Prices for gasoline and diesel have more than doubled since the US-Israel conflict with Iran began in February, affecting transport businesses, farmers and anyone who drives a vehicle in America. Ahead of the critical midterm elections, there have been growing calls for more to be done to reduce the price of fuel, and US President Donald Trump has made several comments and announcements aimed at getting costs down. The question is: what is he able to do with just a few weeks to go before election day - and will it work?
Trump's announcement of a waiver on the use of red dye diesel at a campaign stop this week underscored the importance of gas prices in a midterm election dominated by affordability issues. The election comes as there is widespread public concern over the rising costs of fuel, food and other goods. Voters have tied the issue to Trump and his party, weighing down Republicans running in November.
Polls show a majority of Americans disapprove of Trump's handling of the economy and the war in Iran, which has contributed to high diesel and gas prices in the US. Global oil supplies have been restricted since the conflict in the Middle East effectively halted the usual flow of oil and refined products through the Strait of Hormuz for months. While the flow of crude oil is nearly back to pre-war levels the price remains above $100 a barrel, and sustained high oil prices have had a knock-on effect for diesel and gasoline.
David Ruisard, pricing manager for commodities intelligence firm Argus says the ongoing Russian war with Ukraine has also impacted oil supplies, contributing to higher fuel prices. "Our estimates are that your price increase from about $3 a gallon up to $6 a gallon [for diesel] is 60% connected to the Strait of Hormuz, 40% connected to the Russia-Ukraine conflict," he says. Those higher energy prices are responsible for most of the uptick in inflation this year, Oxford Economics chief US economist Michael Pearce says, which is pushing up interest rates.
"The combined impact of higher rates and higher energy prices is squeezing household budgets and adding to firms' costs," he says. While prices remain high, Patrick De Haan, head of petroleum analysis for fuel price tracking website GasBuddy said there have been modest declines recently for both gasoline and diesel. "A lot of that is likely due to some of the manoeuvres that we've seen the Trump administration employ over the last couple of weeks," he said.
The president announced this week that he would allow so-called red dye diesel - fuel which is used off-road and does not face federal taxes - to be used on US highways without facing federal levies. Ruisard said the only difference in the diesel used by truck drivers and everyday consumers and the tax-free red dye diesel is the dye itself. "The problem with that red dye is, it's extremely hard to clean it out of your tank," he explained.
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