All the ways $6 diesel and rising gas prices are about to make your life more expensive - from commuting to grocery shopping

Andrew Keshner

'Diesel touches everything in the economy,' one analyst says

Record-high diesel prices matter for consumers - even if they pump gas in their cars.

It's almost fall and the weather will be cooling, but Americans' energy costs are going to be blazing hot.

That will likely mean more expensive commutes to work and pricier perishable goods at the grocery store for consumers, who have already been coping with rising prices and paychecks that have struggled to grow faster than inflation.

Rising prices for oil have already led directly to higher prices at the gas pump. Labor Day weekend gas prices broke a record for the end-of-summer getaway stretch.

And record-breaking prices for diesel, the fuel that powers commercial shipping, will indirectly contribute to higher prices in the grocery-store checkout line and elsewhere.

U.S. drivers were paying $4.29 a gallon for gas on average Friday, nearly 30 cents more compared to a month ago, according to AAA. The average price a year ago was $3.19, AAA data showed.

Meanwhile, diesel prices reached $6.05 on Friday. That's another new record beating Thursday's record price, and well past the $3.70-per-gallon price last year, per AAA data.

On Friday, stocks opened higher and oil prices (CL00) (CL.1) (BRN00) remained over $100, but fell for the first time in more than a week. Higher energy prices trace to renewed tension in the Middle East and the ongoing U.S.-Iran conflict, said Pavel Molchanov, senior investment strategist at Raymond James, who specializes in the energy sector.

The bottom line is more price pressures on multiple fronts for everyday consumers in the near future.

"Even if the war were hypothetically to end tomorrow, the price of oil is still going to be higher versus a year ago for a minimum of the next one to two months," said Molchanov. "We could probably even say that, compared to a year ago, it's highly likely that prices at the pump will be higher, year over year, through December."

While drivers know gas prices, truckers and businesses are sharply aware of diesel prices, as the fuel powers tractor trailers, freight trains and farm equipment.

"Diesel touches everything in the economy," Molchanov said. Like gas prices, diesel prices increase quickly after an oil price hike, but decrease slowly after an oil price drop, he noted.

Consumers are facing mounting price pressures. On Friday, consumer inflation data showed a 0.4% monthly increase on the cost of living during August, and a higher-than-expected 3.4% increase year over year.

On Thursday, data showed August inflation rates on wholesale costs matching forecasts. What's worrisome is where those price increases occurred, Diane Swonk, KPMG's chief economist, said on X.

"They were heavily in diesel and heating fuel, [and] the latter tends to get into other prices with a lag and can be extremely broad-based," Swonk wrote.

The combined cost of gas and diesel is now $700 million higher per day compared to a year ago, Patrick De Haan, Gas Buddy's head of petroleum analysis, said Thursday on X.

Attention, grocery shoppers and homeowners who use heating oil

Americans were paying 2.2% more for a basket of groceries compared to a year ago, according to August inflation data. In July, the year-over-year increase was 2.7%. Looking ahead, higher fuel costs could force shoppers to dig deeper, said Phil Lempert, editor of SupermarketGuru.com.

"This diesel spike has more room to move grocery prices than past shocks," he told MarketWatch in an email.

Fuel costs make up 15% to 30% of the price of some foods, Lempert said, pointing to Independent Grocers Alliance estimates. Watch for the spikes in produce, meat and other perishable foods that have to be harvested and hauled on diesel-powered farm equipment and shipped on diesel-powered trucks.

"Perishables can't be warehoused to wait out a price spike, they require diesel-dependent refrigerated trucking constantly," Lempert said.

These items are restocked often, so any higher pricing to account for more expensive diesel would show up "almost immediately, versus shelf-stable goods that can ride out existing contracts and inventory."

Homeowners that stay warm with heating oil in the winter should also brace for higher prices. The estimated cost to heat a house this upcoming winter with heating oil is nearly $2,500, according to late-August estimates from the National Energy Assistance Directors Association.

Residential heating oil averaged around $3.98 per gallon last winter, the organization said. NEADA made its projection when retail diesel prices were at $5.45, but this winter, homes could be looking at heating oil prices around $5.55 per gallon.

Around 4% of households use heating oil as their main heating fuel, according the U.S. Energy Information Administration. But they tend to be clustered in the areas exposed to the nation's coldest temperatures, the agency noted.

"For households predominantly in the upper Midwest and New England with heating oil, this would make for a more expensive winter," Molchanov said.

Heads-up for workers

Drivers are now past the height of summer road trips - and driving data out of California, Indiana, Minnesota and Washington told an interesting tale.

In August, drivers in those states were generally taking fewer trips compared to last year, said Bob Pishue, transportation analyst at INRIX, a traffic data-analytics firm.

"It's hard to tell how much of this is due to fuel prices, as fuel prices are relatively inelastic, meaning a large percentage change in price typically leads to small percentage change in use," Pishue said.

Indeed, millions of people still need to buy gas, regardless of the price, because they have to get to work. And increasingly, it's a cost they can't avoid: More bosses are expecting employees to show up at the office more often, one survey found.

Almost nine in 10 employers said they are requiring at least three days of office attendance this year, according to CBRE (CBRE). That's up from 78% last year, according to the commercial real-estate firm's office-occupant sentiment survey.

The average in-office requirement at Fortune 100 companies has reached more than four days, according to research from JLL (JLL), another global commercial real-estate firm.

America's office market has seen four straight quarters of occupancy gains, JLL Research said, noting that "cities and office buildings are active again and commuting activity continues to increase."

Julie Whelan, CBRE's head of U.S. occupier research, said more commuting is likely in the coming months.

"Office attendance is typically lower during the summer, so the usual post-Labor Day rebound, combined with ongoing efforts to encourage or require attendance, could lead to more employees coming into the office this fall," Whelan told MarketWatch in an email.

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-Andrew Keshner

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09-11-26 1022ET