Diesel’s All-Time High
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Why are diesel prices hitting a record $6.51 per gallon?
The pain at the pump is getting worse. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host today, John Quast. I'm joined by my friends and contributors, Tyler Crow and Matt Frankel. And we have a couple things on the show today. We're going to talk some Berkshire. We're going to talk a question from the mailbag. But first, we want to hit diesel prices. So as of this morning, diesel prices are at a record high of $6.51 per gallon. That's according to AAA. And that is up 76% from this exact time last year. And I think that it's possible that maybe some of our listeners out there are saying, I don't see how this applies to me because I drive a gas car. But let me assure you, this does indeed apply to you.
This is a story that everyone in the country, I believe, is going to feel very soon. Matt, what are some of the ways. And and why are we going to see this in for everyday consumers?
Yeah, I mean diesel prices have pretty widespread economic implications, not just, you know, if if you drive a diesel powered vehicle or have a diesel powered boat or something like that. Uh tr uh trucking companies, that the the companies that move everything around the country, everything that you buy, everything I buy, they generally include fuel surcharges when they deliver items to their c their customers, and they're directly tied to the price of diesel fuel. When you when diesel prices rise, and it's been a long time, I think since Katrina, before we saw a six on a on a fuel price sign in South Carolina, I don't know about where you are, uh, but it's been a while and you know it it's gonna cause some some pain.
I mean, that that's a lot of you said a seventy-eight percent increase. That's a lot to be passing on to your to your customers.
W when we talk about diesel, and we could actually expand this out too to like jet fuel as well, because uh you know, uh gas, uh anything that is a refined product is way up. Obviously, diesel is much higher than gasoline in part, because of what you said is where diesel is much more of a must-have for shipping, for agriculture and things like that. It is kind of the lifeblood of the supply chain industry and moving stuff from one place to another. Uh Like I said, jet fuel is also another one we don't talk about as much because jet cargo is a thing. And while we're probably not moving commodities and things like that on a jet, you know, it it's still it's it right now j uh jet fuel prices are about $200 a barrel, and that's two times the price it was pre-the-Iran conflict.
So and that's increasing relatively fast as well. So you're seeing those similar fuel surcharges on uh airline tickets.
How will record‑high diesel costs affect freight, food prices and airline tickets?
tickets as well. And I would not be shocked if we start to see things pop up in like airline traffic coming in during the holiday season if we see these airline uh fuel source surcharges really start to climb.
Is there anything that we can do about this to bring prices back down? Because, you know, Senator Chuck Grassley coming out and suggesting that we ban the export of diesel fuel. And to me, that idea kind of makes sense because the price is set with global supply and demand economics. And so it stands to reason that if you ban the global demand, that your domestic supply is going to start start outweighing your domestic demand and bring prices down. But is that how it works?
You could probably get a short-term sort of swing here, but there's so many unintended consequences that would likely happen as a result. Let's just give an example. So we export in total about five million barrels per day of refined of refined products, whether that's gasoline, whether that's diesel, whether it's jet fuel, name name it whatever it is. We also import about two million barrels per day of crude oil. Uh so on a net basis we are a net exporter. But the challenge is is we actually export a lot more diesel and we actually are a net importer of gasoline. And so if we were to start banning diesel exports, then all you know, the company the countries that would suffer, mostly Europe is where we do a lot of our gasoline diesel trade with, maybe they start banning gasoline or exports.
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Chapters
6 chapters
1
Why are diesel prices hitting a record $6.51 per gallon?
0:02–2:40
2
How will record‑high diesel costs affect freight, food prices and airline tickets?
2:40–6:58
3
Can banning diesel exports or other policies actually bring prices down?
6:58–10:59
4
Why is it so hard to lower diesel prices in the medium‑term?
10:59–15:55
5
What does Warren Buffett’s retirement mean for Berkshire Hathaway’s leadership?
15:55–19:52
6
Will Howard Buffett become chairman and could a Berkshire dividend be introduced?
19:52–24:17