High-priced diesel and tight supplies: this could be the next blow to the US economy

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New York (CNN Business) --

Diesel prices are soaring to record highs, and low levels of fuel availability in parts of the United States are raising fears that worse is yet to come.

Even if you've never bought a gallon of diesel in your life, as is the case with most US drivers, high diesel prices can affect your wallet and the US economy in multiple ways.

"The first way that high diesel prices impact the economy is that it drives up shipping prices," said Tom Kloza, global head of energy analytics at OPIS, which compiles gas price data for AAA.

"The second way is potential supply chain disruptions. None of that is good."

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Leading energy economist Phil Verleger fears supply shortages could push the average US price of diesel to $10 a gallon by the end of the US summer, above its current record average price of $10. 5.56, according to AAA.

Such high diesel prices could slow the US economy, he said.

"Before the invasion of Ukraine, we had never seen anything like this," Verleger said.

"The market is totally distorted. And we are likely to see much slower economic activity as a result."

Virtually everything you buy is shipped at some point in a diesel-powered truck.

Trucking companies charge their customers a fuel surcharge when prices go up, driving up the cost of what they deliver.

Entire supply chains can come to a standstill if trucks don't have the fuel they need to run.

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It is also essential for its use in agriculture.

Higher diesel prices could force farmers to reduce plantings or fertilization, limiting already scarce food supplies and driving up food prices beyond the added cost of transportation.

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"A lot of truckers just won't be able to operate," Verleger said.

"If you're a farmer, you may have to leave a few acres fallow or you won't fertilize as much. Macroeconomists don't understand this. This will impact us all."

The current national average for a gallon of diesel increased more than 10% in the last month and is 77% higher than a year ago.

Prices in the Northeast are well above $6 a gallon, and in half a dozen New England states, as well as New York, prices have more than doubled in the past year.

By comparison, the national average price for regular gasoline, also at a record high, is $4.42 a gallon, down just under 50% over the same period.