Skyrocketing diesel prices rattle Republicans as midterms approach

Diesel fuel, which powers the global economy and the American heartland, is hitting record prices as the war in the Middle East intensifies, leaving Republican candidates reeling and contemplating extreme steps that economists warn could only increase pain for consumers.Republicans in key states like Iowa and Michigan called for ending exports of diesel refined in the United States to help boost domestic supply. President Donald Trump indicated he backs that step, though his energy secretary on Wednesday said a “blanket ban” won't happen. The U.S. has used 4.1 million barrels of diesel per day this year, and it has exported 1.5 million per day so far, according to S&P Global Energy.The pain is obvious to anyone who drives a diesel-fueled vehicle or relies on a diesel generator to produce power. A gallon of diesel cost $6.52 Wednesday, up 73% from $3.77 right before the beginning of the war with Iran, according to AAA. But the problem will likely spread to every consumer, fueling Democratic efforts to retake control of Congress by harnessing anger over runaway costs and an unpopular overseas conflict.“The price of diesel touches everything in our economy that needs to move,” said Joseph Brusuelas, chief economist for RSM. “That includes the thing we buy the most of, groceries.”Although regular gas prices usually get more attention, diesel has swiftly become a hot issue on the campaign trail. Adam Hamilton, a Democratic Senate candidate who has mounted a surprisingly strong challenge to Republican Sen. Roger Marshall in Kansas, told supporters in a Topeka coffee shop this week that farmers are afraid that it's getting harder to make ends meet.“A war has sent up the price of diesel,” Hamilton said. “These guys said, ‘We don’t know if we’re going to keep the farm.’”Elaine Luria, a Democrat running for a southeastern Virginia House seat, cited the high price of diesel at a Virginia Beach roundtable Wednesday. “Iran is no further from acquiring a nuclear weapon. And Iran’s proxy groups, such as the Houthis in Yemen, are now expanding the footprint,” she said in an interview, adding that the conflict is becoming “an expanding economic crisis.” Luria is a former congresswoman trying to reclaim her seat from Republican Rep. Jen Kiggans. Republicans like Rep. Ashley Hinton, who is running for Senate in Iowa, have called for an immediate end to the war and a ban on selling diesel overseas, hoping the extra fuel would then lower prices for Americans. “Iowans are being squeezed and shouldn’t have to foot the bill at the pump or the checkout line for the war in Iran,” Hinton said. “We need to use every option at our disposal to provide some relief from high prices.”The idea has split Republicans. Senate Majority Leader John Thune of South Dakota said he's open to it. Sen. Chuck Grassley, who is also from Iowa, has become the proposal's strongest champion, rejecting criticism from his colleagues from fuel-producing states. “IF U CAN EMBARGO CHIPS U CAN EMBARGO DIESEL,” Grassley posted on social media, referring to export controls on computer technology.Trump on Tuesday told reporters that “I've called for that too,” although Treasury Secretary Scott Bessent said the administration was still exploring how it might lower diesel prices. Energy Secretary Chris Wright echoed that point Wednesday, telling a climate conference in New York that “nobody wants a full blanket ban of zero exports of diesel, that's not what's being discussed,” Diesel prices have skyrocketed due to a collision of events. The Middle East produces a disproportionate share of the oil used to refine diesel, leading its price to rise faster than gasoline since the conflict began in February. The closure of the Strait of Hormuz during the war took about 20% of the world’s oil off the market, which raised the prices of diesel, gasoline and jet fuel.Popular ReadsSome of that supply has come back, but it’s nowhere near prewar levels, said Debnil Chowdhury, who leads the Americas and Europe fuels and refining team at S&P Global Energy. Then there were significant attacks by Ukraine on refineries in Russia, taking 800,000 to 1 million barrels per day of diesel off the market, according to S&P. “These attacks have been pretty prominent," Chowdhury said. "If there is a way to a peace deal or a peace agreement announcing that there will be no more attacks on Russian refineries, on Middle Eastern refineries ... that would obviously make the largest impact on the underlying price.”“The last few months eroded everyone’s cushion, but the last few weeks? Diesel went from under $6/gallon to over $6.53. Again, that was just in the last two weeks. You tell me what business, small or even large, budgeted for that,” William Stern, chief executive officer of Cardiff, a San Diego-based small business lender that's seen requests for loans spike due to the price increase, wrote in an email. An export ban could make an impact — in the wrong direction. The American Petroleum Institute warned that diesel prices would actually rise for most Americans if an export ban is enacted, a caution shared by several economists.“That will result in Americans taking a one-two punch for food and fuel prices that just don't stop,” Brusuelas said.If U.S. refineries, which take crude oil and turn it into gasoline, diesel and jet fuel, stopped exporting diesel, they would wind up with a surplus of the material. They would need places to store it. Once those storage tanks filled up, analysts warn, refiners would have to stop making diesel. But they can’t just switch off diesel production without effectively cutting the supply of those other fuels and raising their prices.“There really is no easy way to repair the kind of damage it would be to the global diesel supply chain,” Chowdhury said. “It really will have this effect across the entire global economy."He added that "the chances of a global recession would increase massively as well.”Phil Verleger, a longtime energy economist who advised the federal government during the 1970s oil shock, said he thought a diesel export ban could bring prices down but still have an extreme cost. ”In a couple decades," he warned, “the U.S. fossil fuel industry is dead.”That's because the U.S. has been a reliable supplier of diesel to other countries that would likely look elsewhere if it cuts off supply. Verleger and other economists cited former President Richard Nixon's ban on the export of soybeans in 1973, which led to the rest of the world shifting to Brazil as a more reliable supplier. Now the South American country grows more than the U.S.But Verleger, who comes from an Iowa farming family, says he understands the visceral pain that a diesel spike causes, even though he also knows the dangers of trying to regulate it away. “It’s terrible economics, the long-term consequences will be horrible,” Verleger said. “If I were an elected politician, I'd do it."_____Riccardi reported from Denver and Bussewitz reported from New York. John Hanna in Topeka, Kansas, and Sarah Rankin in Virginia Beach, Virginia, contributed to this report.