Diesel Fuel Price Hits All-Time High. No End In Sight To Price Crunch.

Diesel gas prices have hit an all-time high as the Iran and Ukraine wars continue to put pressure on refinery production and disrupt supply chains.

AAA showed on Friday that a gallon of diesel is now $5.85, up about 23 cents in the last week. Compared to the same time last year, diesel is now more than $2.13 per gallon higher. That 57 percent year-over-year rise in the price of diesel largely correlates with the start of the Iran war in February, which had an immediate impact on oil prices.

The war resulted in repeated attacks on oil refining infrastructure throughout the Middle East, as Iran launched attacks at neighboring countries in response to attacks by the U.S. and Israel. Also, shipping through the Strait of Hormuz, through which 20 percent of the world's oil supply once traveled, has been largely disrupted.

The Atlantic Council, a nonpartisan think tank, produced a report detailing the diesel fuel crunch and its potential impact, noting that some sectors such as farming and trucking will be especially hard hit.

"Diesel is tightly integrated in trucking supply chains and the US agricultural industry in particular. Both segments are facing challenges amid elevated prices. As harvest season unfolds, farmers are warning that they will be squeezed by rising diesel costs," the report states.

Because diesel is so integrated into agriculture and transportation, the report predicts that the economies of rural states will be directly impacted. Specifically, the report points to North Dakota, Wyoming, Alaska, New Mexico, Mississippi, and West Virginia.

However, says that all areas of the country will be affected in some way by higher diesel prices.

"While Alaska and other rural states are particularly impacted by rising diesel costs, all states will feel a blow. Total distillate fuel oil usage closely tracks population size, as Texas, California, and New York are the largest consumers. While some will feel a diesel crisis more than others, very few Americans will be insulated due to its impact on inflation," the report notes.

Adding to the diesel crunch is the ongoing war between Russia and Ukraine. NBC News reported that Russia has extended its ban on diesel exports through the end of this month. Russia has historically been one of the largest exporters of diesel fuel, but the country has faced retaliatory drone strikes from Ukraine in recent months.

The Atlantic Council report states that there appears to be little price relief in the future given global circumstances.

"Despite a small recovery in shipments during the short-lived ceasefire, exports from the Gulf remain well below pre-war levels, global oil inventories are falling, and global refinery capacity is damaged due to wars in the Middle East and Ukraine," the report states. "Unless and until the war in Iran is resolved, and Middle Eastern crude and refined products exports approach pre-war levels, diesel prices will continue to march higher."