U.S. fuel prices surge ahead of midterms, pressuring consumers and farm states

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U.S. fuel prices surge ahead of midterms

Highlights

U.S. gasoline hits $4.20/gallon and diesel $6.32/gallon, both record election-week highs, driven by supply disruptions from Middle East conflicts.
Trump rejects a diesel export ban but permits tax-exempt offroad diesel use on highways and launches an $8 billion relief program for fuel-hit farmers.
Brent crude rises over 13% and WTI 15% in October, with market risks from Russia deal and regional conflict escalation likely to sustain price pressure.

Election-week fuel costs and supply disruption

As reported by CNBC, citing GasBuddy, U.S. gasoline and diesel prices are on track to reach their highest level ever for an election day, with the national average for gasoline at $4.20 a gallon on Friday. Patrick De Haan, the company’s head of petroleum analysis, says prices have never been this high this late in the year, while diesel has climbed about 70% from a year earlier to $6.32 a gallon.

Trump told voters during the 2024 campaign that his energy agenda would cut gasoline prices below $2 a gallon within 12 months of taking office. Instead, prices spike after the U.S. and Israel attack Iran on Feb. 28, prompting retaliatory strikes by Tehran on tankers moving through the Strait of Hormuz and disrupting oil flows through one of the world’s most important shipping routes.

The White House says inflation-adjusted gasoline prices have been higher around some previous election days, and notes that exports through Hormuz rebound during the summer as the U.S. military helps ships pass through the strait. But the Middle East disruption is compounded by Houthi attacks on Saudi refineries and Ukrainian strikes on Russian refineries, keeping pressure on global fuel markets.

Political fallout and wider economic impact

High diesel costs are becoming a particular concern for agriculture, freight and broader economic growth, especially in farm states such as Iowa ahead of Tuesday’s vote. ExxonMobil CEO Darren Woods tells CNBC that diesel is the key crunch point because of its importance to transport and the economy, while airlines raise fares to offset jet fuel costs, complicating efforts to contain inflation.

Trump faces pressure from fellow Republicans to respond before the election. He rejects a diesel export ban after concerns it could also push up gasoline prices, but signs an executive order allowing truckers to use tax-exempt offroad diesel on U.S. highways and announces an $8 billion relief program for farmers hit by rising fuel bills.

He also reaches a controversial deal with Russian President Vladimir Putin to allow Moscow to export about 6 million barrels of diesel into the global market through November. Critics, including Ukrainian President Volodymyr Zelenskyy and some Republican senators, say the agreement rewards Russian aggression, while energy analysts argue the additional volumes are too small to materially shift global prices.

Crude markets continue to reflect the risk of renewed conflict after the election. Brent crude rises more than 13% in October and U.S. West Texas Intermediate gains 15%, with De Haan warning that any escalation could add further upward pressure to fuel prices just before Thanksgiving travel.

Our earlier coverage of the Strait of Hormuz shipping disruption explained that prolonged uncertainty is beginning to hit agriculture through higher fuel and fertilizer costs, more cautious planting, and added supply-chain expenses. We also noted that these pressures had already pushed agricultural commodity prices higher and raised food-security risks in import-dependent regions, with further price increases likely if disruptions persist.

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