(Not So) Fun Fact: Since the beginning of the conflict with Iran, higher energy prices in the United States have cost U.S. businesses and consumers an additional $108 billion – more than $800 per household.

Higher Costs to Move and Ship Stuff

What’s Happening: The cost of moving from point A to point B – whether by land, air, or sea – continues to rise. As of this week, the national average price of diesel has set another record high of $6.40 per gallon, representing a 70-percent increase compared to the same time last year. Since the Iran conflict began, U.S. consumers and businesses have paid nearly $50 billion in additional costs due to higher diesel prices, on top of close to $60 billion in additional gasoline costs. Diesel prices have had a particularly negative impact on U.S. farmers and truckers who rely on the fuel as a vital input for operations. Rising costs have inspired some Republicans to consider a half-baked plan to ban U.S. exports of diesel in the hopes it mitigates domestic prices.

At the same time, the cost of transporting oil has risen substantially, with the benchmark rate to charter a supertanker rising from a little over $200,000 per day to more than $980,000 as of mid-September, according to industry authority the Baltic Exchange. One estimate places the daily cost at $1 million, meaning oil tanker rates have surged by as much as 500 percent. Freight rates for container vessels are in the same boat (no pun intended). The World Container Index – a composite measure of global shipping rates – shows that freight rates have risen from about $1,900 to nearly $4,500 per 40-foot container, a roughly 130-percent increase between February and September. Factor in longer trade routes due to the Persian Gulf’s reduced capacity, war-risk insurance, and higher fuel costs and the picture becomes even more bleak. The ripple effects from the Iran conflict have also hit airlines as the price of jet fuel is up 16 percent from a month ago and over 100 percent compared to last year. This has not only impacted American travelers but the cost of air freight as well, with one global measure showing rates up 20 percent and another showing U.S. rates up close to 50 percent since February. These additional costs have forced companies such as UPS, Amazon, FedEx, and USPS to raise surcharges.

Why It Matters: Rising energy and transportation costs contribute to rising inflation and have a significant impact on the resiliency of the U.S. economy. A truck, tanker, cargo ship, and airplane are not only moving from one destination to another, but they carry goods or produce services that become more expensive to lug around. Additional costs – whether they be tariffs or higher transport costs – can only be absorbed by the shipping industry for so long before they are passed downstream to other U.S. businesses as well as U.S. consumers. As the Shipment covered previously, it is estimated that a 20-percent price shock to crude oil would raise the Consumer Price Index by 0.3 percent, which does not fully account for the downstream impact to the overall U.S. economy. While this represents the general impact energy prices have on the economy, the same concept holds true for higher diesel, jet fuel, and bunker (maritime fuel) prices on a more concentrated level. Price hikes for these fuels have a particular impact on industries such as farming because machinery, trucks, and other operations directly use diesel. Consumers are indirectly affected by higher diesel prices, which translate into higher food prices, more expensive shipping packages, and costlier airfares, to name a few.

According to a paper released in July by Congress’ Joint Economic Committee, farmers spent an estimated $1.4 billion more on diesel during the 2026 planting season than in 2025. This takes into account only the added costs associated with harvesting corn, soybeans, wheat, cotton, and rice which means it understates the overall impact to U.S agriculture. Using the same data and estimates of diesel use per acre for the same set of crops, the Shipment estimates current diesel prices add $1.6 billion in costs compared to the same time last year (depending on the trajectory of diesel prices and diesel usage this estimate shifts to between $1–$2 billion). Moving crops and other inputs also costs more, as every $1 per gallon extra for diesel adds about $0.16–$0.20 per mile in operational costs. This same predicament has impacted the trucking industry at large, with fuel costs typically constituting 20–30 percent of operating revenue. These higher costs have contributed to Amazon instituting fuel and logistics related surcharges for sellers in April and USPS raising prices by 8 percent around the same time. Each of the major package delivery companies is expected to have higher than usual fees for shipping this holiday season. This is not a new phenomenon as there are usually temporary “peak season” hikes, however, the average 6-percent hike expected by USPS this year is slightly higher than the roughly 5-percent uptick last year. The passthrough of higher transportation costs will continue for the foreseeable future, undoubtedly hitting the pocketbooks of consumers this holiday season.

Looking Ahead: The road ahead for energy markets looks bumpy, to say the least. The conflict in Iran will continue to pressure the price of all varieties of fuel used globally and strain supplies in regions that are heavily dependent on energy flows from the Persian Gulf. The recent escalation in Yemen by the Iranian-backed Houthi rebels has thrown yet another wrench in the global energy wheel as additional pipelines, refineries, and trade routes have become fresh targets. The longer the uncertainty and closures of energy infrastructure in the Middle East lasts, the more likely it will exacerbate inflationary pressure on the U.S. economy.

In Other News

The Russia Sanctions Bill: The U.S. House of Representatives passed the “Lindsey O. Graham Sanctioning Russia and Iran Act of 2026,” meaning it will go to President Trump’s desk to sign into law. The bill passed the Senate 86 to 11 and failed to add any language that would remove “secondary tariffs” on Russia’s trade partners. This Russia sanctions bill would authorize the president to impose up to 100-percent tariffs on the five largest purchasers of Russian crude oil and natural gas but provides limited language specifying the data source used to determine which countries should be targeted. Top purchasers of Russian energy differ based on data source, energy product, and whether “dark shipping” – the practice of illicit oil shipping – is included. Regardless of data source, China and India are among the most likely countries to be slapped with tariffs as a result of this legislation, which may impact the upcoming China summit next week as well as the trade deal with India. If President Trump goes ahead with imposing 100-percent tariffs, this would be effectively a blockade for many U.S. imports from targeted countries and would further inflate the already elevated cost of living.