The Trump administration’s military action in Iran has sent the price for diesel fuel soaring in the U.S.
AAA Michigan says the cost of a gallon of diesel is at an all-time high for the state at $6.54 per gallon. That’s $2.83 per gallon more than a year ago.
Iran has largely kept the Strait of Hormuz closed to oil tanker traffic following attacks by the U.S. and Israel in February.
Michigan businesses are now left to figure out the best way to proceed amidst increasing costs and inflation.
Cristina Benton, the Director of Market and Industry Analysis at Lansing-based Anderson Economic Group, said businesses are having to change their strategies to deal with the added costs.
“Some corporations may look at absorbing some of the costs in order to keep their prices down and gain market share relative to other corporations that might not be able to do that,” Benton said.
Fuel prices affect nearly every sector of the economy, from trucking to construction to the family farm.
“The high diesel prices are happening at the peak of the harvesting season, when farmers want to fuel combines and tractors,” Benton said.
Regardless of strategy by corporations or small businesses, the added costs will ultimately trickle down.
“Eventually, businesses, if they are not able to absorb those costs, they have to pass them along,” Benton said. “And eventually, the final consumer would see higher prices.”
