The latest spike in fuel prices is harder to stomach than the one earlier this year as businesses and consumers have less capacity to absorb the shock, while fresh price data show inflation is spilling over beyond energy.
While crude oil prices have somewhat moderated despite the Iran war reescalating recently, refining constraints have kept gasoline and diesel costs high. Average diesel prices hit $6.30 a gallon Wednesday, up about 68% from before the Iran war, according to AAA. And because diesel is especially critical as an industrial fuel used in manufacturing, farming, and transportation, its price surge has been pervasive across sectors.
The Labor Department’s consumer price index showed core inflation rose to 2.6% in September from 2.4% in August, signaling businesses are passing on more costs. Meanwhile, the retail sales report showed core spending outside gas stations rose just 0.2% as fuel took a bigger bite out of wallets.
Those trends were backed up by the Federal Reserve’s latest Beige Book survey of business and economic conditions, which was riddled with red flags about higher fuel prices across the country.
It showed that not only were more fuel surcharges popping up throughout the supply chain, but that profit margins were also getting squeezed and consumers were pulling back on spending to offset the pain at the pump[1].
The New York Fed said one food manufacturer had not seen such broad-based inflationary pressures since the pandemic. The San Francisco Fed noted another manufacturer’s complaint that every material purchased in recent weeks came with a freight surcharge.
oh, for fuck’s sake; that “pun” expired at least 30 years ago ↩︎
It showed that not only were more fuel surcharges popping up throughout the supply chain, but that profit margins were also getting squeezed and consumers were pulling back on spending to offset the pain at the pump
What pun? I’m genuinely bad at gas stations and sometimes call my designated car friend if a pump is a different style, color, or whatever
“Pain at the pump” enjoyed its moment in the limelight (and was quickly overused) when “pay at the pump” was being widely rolled out and gas prices were surging to absurd levels like $1.39. (Before that, you pumped your gas, then went inside and paid.)
Huh, interesting. I figured when they started forcing people to pump their own gas they would have had you pay at the pump.
Full-serve was largely gone by the late '80s (even Oregon became Mini-serve; gas got pumped, but no windshield cleaning and checking on fluids). When I’d visit my grandparents, they’d always go to the one remaining gas station in town with full-serve as an option, and I thought it odd that they had someone do it for them. But the tech wasn’t ready yet to take card payments at pumps, so there was a (somewhat long) window where it was self-serve but still on the honor system, with laws specifically geared toward drive-offs.
