Diesel – often dubbed the ‘industrial workhouse fuel’ – is integral to the powering of energy, transport, construction and agriculture.
So news that prices have hit an all-time high of 199.18p per litre in the UK, as the Middle East conflict continues to push up the cost of fuel, is another unwanted milestone in this year of . Petrol is rising in tandem, and currently hovering around 174p.
For industrial gas firms, the energy price rises impact upstream logistics, midstream transport and downstream distribution.
Cylinder delivery vans, bulk tanker trucks (HGVs) and cryogenic tankers are almost universally diesel-powered in the UK because diesel engines provide the torque needed for heavy loads. Diesel has been the standard fuel for commercial logistics for decades and alternative‑fuel HGVs (electric, hydrogen, LNG) remain rare and mostly in pilot programmes.
Rising diesel is far more than a transport budget issue; it impacts the cost of raw materials, everything from steel for cylinders and pipelines, and chemicals and catalysts, to maintenance parts and imported equipment.
Diesel shocks and geopolitical disruptions have already removed around a fifth of global diesel shipments since the Iran conflict started at the end of February. And it may get worse.
US President Donald Trump said the administration is “very seriously” considering a diesel export ban as fuel prices surge ahead of the November midterm elections.
Around 38% of all vehicles on UK roads run on diesel. While the UK is self-sufficient for petrol, it has become more dependent on imports for diesel.
The UK’s steady reduction in refineries has withdrawn capacity and another challenge is low stockpiles – with around 42 days in storage – which is significantly less than market leaders such as Canada, Japan and US.
Ed Conway, Sky News’ Economics and Data Editor, said, “You might have thought, when the Strait of Hormuz closed, people in government might have said ‘we need to get that line up’ – but it went down. It’s a very big issue.”
He said DESNZ data is only published every quarter, so it is hard to know the latest situation.
The challenges aren’t limited to the UK. Across the channel, rising diesel prices driven by geopolitical developments are costing the EU economy an additional €200m (around $228m) daily.
Latest Europe‑wide diesel averages range from about €1.71/l ($2) in Türkiye to over €2.55/l ($2.9) in Denmark, with the EU weekly average at €2.138/l ($2.42).
The problem in Europe is that each EU country can add its own taxes to the minimum rates, causing significant differences at the pump. Taxes often make up two-thirds of prices.
This creates a scenario where diesel prices are actually higher in Europe than in Asia, despite Asia being more directly affected by the conflict involving Iran.
A window for biomethane
European Commission President Ursula von der Leyen, in her recent annual State of the Union speech, said that rising energy prices and borrowing costs are hitting both citizens and businesses, and that the EU must , and other homegrown clean energy sources to bring energy prices down.
Biomethane provides an immediate, cost-effective alternative to diesel for HGVs and buses, delivering up to an 80% to 90% reduction in greenhouse gas emissions on a well-to-wheel basis, according to the Green Gas Task Force.
Taskforce-backed analysis indicates that the total cost of ownership for a 44-tonne biomethane HGV is lower than a diesel equivalent, aided by fuel-duty differentials and lower operating fuel costs.
When derived from specific waste or slurry feedstocks that capture fugitive methane (which is vastly more potent than CO2), lifecycle emissions can reach carbon-neutral or even net-negative levels.
Trials show significant drops in harmful pollutants compared to diesel equivalents, including reductions in nitrogen oxides by over 85% and particulate matter by over 97%.
US strengthens export position
Back in early 2022, the biggest diesel exporters were the US and Russia; fast forward four years and Russia, languishing from sanctions, has dropped markedly (to around eighth spot) while the US has cemented its premier position, far ahead of India in second place.
Most US exported diesel goes to Mexico and the Netherlands, where it can be shipped on to end user markets.
Currently diesel prices on the Gulf coast are around $5.40, but there are regional variations, with prices dropping to around $5.1 on the east coast, while higher in California ($6.14-6.44) – which imports diesel from China and elsewhere.
“Even though you have refineries in the Gulf coast and Midwest, the pipeline network in the US isn’t good at getting diesel around the continent itself,” added Conway.
If the US implements a ban on diesel exports, could that lead to other commodities? The US is the world’s largest LNG exporter and while its rather than restricting it, the chaotic dynamics in the energy markets may mean nothing is off the table.
“If you think about LNG – which is still the bedrock for importing and exporting gas around the world – historically the world was reliant on Qatar … but by far the biggest rise has come from the US, so Europe has become incredibly dependent on US gas,” added Conway. “If that was banned as well, that would be really worrying.”
Shielding operations from the rising prices is not easy but some of the following strategies can help.
Hedging Enter into contracts to buy or sell diesel at fixed prices to protect against fluctuations
Data-led procurement Evolve from simple price-taking to more sophisticated strategies that incorporate analysis for better decision making
Invest in fuel supply security Ensure reliable fuel delivery by minimising import dependency
Explore alternative technologies alternative fuels are rising in stature, but sourcing at scale remains a challenge
