Today, Explained - The coming oil shock

Episode Date: September 29, 2026

You might not use diesel to fill up your car, but it fuels the US economy, and President Trump’s solution to lower diesel prices might just make things worse. This episode was produced by Miles Bryan and Avishay Artsy, edited by Amina Al-Sadi, fact-checked by Gabriel Dunatov, engineered by David Tatasciore and Bridger Dunnagan, and hosted by Noel King. The price of diesel fuel above $8 a gallon is displayed outside of a Shell gas station in Carson, California on September 22, 2026. Photo by Patrick T. Fallon/AFP via Getty Images. Listen to Today, Explained ad-free by becoming a Vox Member: vox.com/members. New Vox members get $20 off their membership right now. Transcript at ⁠⁠vox.com/today-explained-podcast⁠.⁠ Learn more about your ad choices. Visit podcastchoices.com/adchoices

There is a time bomb lurking in the American economy. It has the potential to make almost everything even more expensive, and some experts say it's about to explode. You see it every time you gas up your car, but you probably ignore it. Diesel. The price of diesel has gone up and up and up since the war with Iran started. Diesel powers the American economy, and in about a month, it will almost certainly power Americans to vote in midterm elections

where they say high cost of living is that. their biggest concern. Aware that a wipeout is possible for Republicans in November, President Trump is up to his old tricks, trying to meddle in the U.S. economy. Coming up on today, explained from Vox, well, it's I ran this and I ran that. Well, I ran out of damn money, trying to start selling pictures of my feet. I might not have money for food or to hang out with my friends, but I always have money for candles. I always have money for candles. Support for the show comes from Honest. Parents want the very best for life's most delicate skin.

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I'm Nathan Bowley. I'm a business reporter at Axios, an author of Axios Closer, A Daily Newsletter, and All Things Business. What is diesel? Diesel is essentially a fuel made from another fuel. Diesel is made from crude oil, and it's basically refined into a liquid that essentially powers the economy. And so diesel is primarily used in trucks and in farming equipment and an industrial machinery that essentially allows us to ship things from place A to B. Diesel is a fuel that I think a lot of people just don't pay attention to until something goes bad. And that's what we're facing

now because the price of diesel has spiked. And, you know, that affects trucking in particular and most products in America are shipped along the road via trucks. It seems like every single week we start the video saying the same shit, fuel prices again, hit a record high. I'm like a damn auctioneer over here in my head trying to figure out how much money this truck's going to take them. Hey, da-da-da, hit the high, hit they five. Oh, apparently it's $175. This is getting redam ridiculous. Okay, so we're talking about serious rises in prices here.

What is actually happening with diesel? Why is this going on? Obviously, there was one major geopolitical event this year that disrupted the entire energy economy, which is the U.S. and Israel attacking Iran. Right from the beginning, we projected four to five weeks. Iran is, of course, at the headquarters of the oil economy in some ways, but primarily the thing you have to look at is the closure of the Strait of Hormuz and then the jockeying over it that's happened in the months since then.

With the war now passing 200 days, Iran claiming it struck an oil tanker trying to transit the Strait of Hormuz. As President Trump rejects Iran's proposal for a seven-day ceasefire to reopen the critical waterway. Once they closed that straight, that disrupted the entire global energy economy because that straight handles a substantial portion of the shipping that basically where they bring the supplies out of the Middle East and ship them to other people. And so that affected diesel prices, gasoline prices, affected jet fuel, affected effectively everything that is based on crude oil. I don't know how much more they can take, but whatever it is, it doesn't matter. And I'm not affected by the election. Who are the people right now that are profoundly freaked out about the cost of diesel?

Well, first off, I think certainly truckers are freaked out because their cost of doing business is going much higher. While nationwide, word of a possible truck driver's strike is fretting. If there's no freight, nothing moved. No police ticket, no grocery store, nobody eat, nothing moved. No construction on the highway. trucking is a fundamental. And I think also farmers are freaked out because they're already facing real pressures from the trade wars that are going on that President Trump started,

from things that are totally out of control like climate issues that have caused their costs to go higher. And all of a sudden the price of diesel affecting farmers as well so that then eventually affects the price that they charge, which ultimately gets to the consumer because it ends up costing more to pay for things like an ear of corn. We're in the middle of harvest, the time that we use the most diesel. So it's really hitting us. I mean, we don't make any more for a bushel of corn, wheat, a pound of beef.

So, yeah, that comes straight out of our pocket. How stark do you think this might be? Like, in a month or two months, do you think I could go down to the Walmart and I see that something I buy all the time is now a dollar more expensive? or there's like a sign saying diesel is expensive, so we're adding a, you know, a 10% surcharge. Like, what do you think this actually might look like? I think that the impact is imminent. Oh.

This flows through very quickly, usually. You know, we're not talking about months. We're talking about weeks, if not days, before people will start to notice increases, especially in the grocery aisle. I think that's the first place people will notice it because fresh food has to be shipped on a weekly basis. And so I think diesel prices are going to have a big effect on food inflation. And this is coming off of, of course, several years of food price increases that we experienced

in the wake of the pandemic. And then we're also now barreling toward the holiday shopping season. And holiday shopping season is going to be affected by this as well. Because if a toy, for example, was made with some sort of resin that is affected by the cost of crude oil, which also affects the cost of diesel, and then it's shipped over the road to Walmart through a truck that uses diesel, all of these things add up. And ultimately, it could probably lead to higher prices. We've also got an issue with heating oil, which is a fuel that is used primarily by households in the Northeast where essentially they're using that to heat up their home.

And heating oil and diesel and all these, you know, these oil-based products are caught up in this vortex right now. That ultimately is not something that the ordinary person can do that much about. Okay, this is super interesting because it is everything. Power is the U.S. economy, like you said, when something is this crucial, one wonders if there are like alternatives. Do the industries that rely on diesel have any other options? There's definitely alternatives to diesel, but in many cases, they're not alternatives that can be switched too quickly. Because if you think about the trucking industry, you know, they're invested heavily in these big rigs that are taking products from places, A to places B. And so if you are invested in a truck, you know, yes, you could theoretically switch,

but you're going to be basically scrapping this huge investment you've made. And so, you know, diesel trucks are not really going anywhere immediately. Also, a lot of times, they're simply still the best way to get somewhere. And because you can switch to rail, for example. So railroads are definitely a competitor to trucking, but really only best for certain types of products. Now, there are other types of trucks that you can buy. Certainly, maybe a compressed natural gas or liquid natural gas, LNG, is alternative fuel for some trucks and biodiesel. In some cases, can actually be good. And then, you know, maybe down the road hydrogen or something, that's really more of a futuristic thing. Now, in the short term, there is, there is the possibility of using electric trucks that is starting to become more realistic. In fact, just in recent days, Tesla began major production of the Tesla semi, which is an electric semi truck that we've been waiting for for years. So this is really going to be a game changer truck. And also it's going to make a ton of sense economically because the cost of electricity per mile is much less than the cost of diesel, especially in these crazy times.

I remember covering this in 2018 when Tesla debuted the Tesla semi. We all thought this was going to be coming out soon. Production begins 2019. Well, it's taken nearly a decade for this to finally become a reality in large proportions, but the Tesla semi is an electric truck that could be an alternative for some. And then, you know, there's other companies that are making electric trucks too. So that could be sort of viable. But the problem with electric trucks is that the battery is so heavy that ultimately it's still tough

for electric trucks to compete with diesel on shipping heavy ice. It was often joked that when the Tesla semi first debuted, the very first thing that it shipped was a bunch of bags of Cheetos because Cheetos was so light and they couldn't handle any extra weight. And so, you know, they had that deal with PepsiCo, and I'm sure PepsiCo needed those trucks, but it wasn't ready at the time to ship anything expensive. It's a lot better now. But again, the issue still is because of how heavy electric truck batteries are going to be

that is still going to make them somewhat limited in their capacity. But I do think that you're seeing some demand for the Tesla semi that indicates maybe it will become more competitive with diesel because of the price of diesel now. Okay. So when prices are high, generally, somebody somewhere is benefiting from high prices. Who is it in this case? I think that the people who are benefiting here from diesel prices being so high are these refineries, which a lot of people don't really think about that much because they're sort of the middle

person, you would say, in this entire process. They're the ones who essentially take the crude oil and turn it into usable diesel for a pickup truck or for a semi-truck or for farming equipment. And when that refinery business is experiencing such high demand right now, there's limited capacity to do this. And I think because of some of these issues in Russia. Where Ukrainian drone strikes are hitting critical energy facilities. Wow, look at the lid. blowing off of that. And in Iran, of course, and in other places throughout the world, there's just limited diesel refining capacity right now, which means that there's just not really anywhere else

to do this, and therefore they can charge higher prices. So that means higher profits for the refineries. Okay, so all of this is shaping up to potentially mean a really ugly winter. One thing I think about a lot is that American consumers will accept a lot of pain. Like we had COVID, the inflation, the shortages of literally everything. Then we had the war in Ukraine and prices go up again. People still, however, keep spending money, even as we predict, like, oh, God, this one's going to get bad. People still go to the store and they spend money and maybe they gripe, but it's not like

we're out in the streets. Do you think that this coming diesel shock, imminent, your words, is going to be different? Well, I will say that. And I'm not an economist, but there is this interesting phenomenon emerging in the economy where consumer sentiment is rock bottom, but consumer spending is actually really strong. And so there's this gap emerging between what people say they feel and between what they're actually doing, which is in this case, they're still actually spending. Now, maybe it's sort of yolo spending. They're thinking like, well, you know, I really don't got much going for me. I'm just going to keep spending, you know.

I mean, I've experienced that a little bit. So, hey, I don't blame anybody. But, you know, hey, at the of the day, I think that the numbers matter a little bit more than what people say they feel. But I do think people are going to hit a breaking point at some point because they simply can't continue this level of spending if the underlying fundamentals of the economy start to collapse. Axios's Nathan Bomi. Coming up next, President Trump's wild idea to lower diesel prices. Support for the show comes from Quince. A fall is the perfect time to pull out some of those items of clothing that just work with everything. From the sweater that's perfect for when the temperature drops to the coat that goes with everything.

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This includes household names and small businesses just getting started. So if you're ready to hear the... Head over to Shopify.com slash Explain to start your free trial. Today, that's right. Start your free trial at Shopify.com. That's shopify.com slash explained. Everybody has a hot take on the economy. And whether you're curious about inflation, trade wars, or the markets, what you need is reporting you can trust.

Hi, I'm Kai Rizdahl, the host of Marketplace. Our award-winning reporters talk to everybody from CEOs to farmers to help you understand how the economy takes shape in the real world. You'll be smarter every time you listen. And these days, that's priceless. Listen to Marketplace on your favorite podcast app. It seems like every single week we start to vote. video saying the same shit. Did I explain? To get on hit a record high. When is this going to stop? This is absolutely crazy.

Colin Eaton covers the oil and gas industry for the Wall Street Journal. Colin's been reporting on an idea that President Trump has floated. A diesel export ban. So a diesel export ban would basically stop shipments of diesel to overseas customers. And it's unclear at this point whether it would be compulsory or voluntary. Last Tuesday, Trump said he's in favor of banning American exports of diesel. Well, I've gone for that, too. I've said, let's not send out the diesel. We make a lot of diesel.

Over the weekend, he told reporters again, they're seriously considering it. So what about an export ban on diesel? Well, we're thinking about it very seriously. Basically, yeah, they think that they can inject some juice into the arm of agriculture by lowering diesel prices ahead of the midterms, and that might shore up some boats for them in the Midwestern. states. And there's something to that Goldman Sachs said that they estimate banning diesel exports would bring prices down about 25 cents a gallon each week that the ban is in place. But that's really

just a temporary effect. Let me get just a bit more detail on the actual logistics of what a ban would mean. The United States sells diesel where in the world? How does it get there? What would this mean if I am a consumer in one of the places where the U.S. sells diesel to? Right. So the U.S. U.S. oil refineries, they send diesel on gigantic tankers to Europe, to Asia, and they have a lot of global customers. The United States is actually one of the last major suppliers of diesel right now because Russia and refineries in the Middle East are unable to get supplies out. And Russia, you know, Ukraine has struck refineries with sort of long-range missiles. And in the Middle East, Iran has hit some refineries in neighboring countries and, you know, has closed Strait of Hormuz. So what this means is that the U.S. imposing restrictions on diesel exports would essentially bring prices higher for overseas countries because right now we're a major supplier for the world, essentially. Okay, so we think of big oil companies as some of the more powerful operators in the American economy.

This sounds like the president of the United States potentially saying, hey, I want you to sell less overseas or not sell overseas. It's like the president is telling the oil companies what to do. What are you hearing from the oil companies themselves? Oh, I mean, the oil companies hate the idea of banning diesel exports. I mean, they've been worried since the Iran war started in late February that the admin would implement some sort of restriction on exports to help shore up prices. So, yeah, we were surprised because I think if anything, it provides just temporary relief. An export ban would actually potentially raise fuel prices for American farmers and American consumers. And that's the exact opposite thing we should be doing right now.

They've pushed back on it a lot with the admin. They got reassurances several times from the administration. that they weren't considering it. And then last week at the United Nations General Assembly, Trump says he's in favor. I've called for it within my people. I've been talking about it. They've sort of clarified their position.

Energy Secretary Chris Wright is spearheading the details on this. And he's saying it could be a voluntary pullback in diesel exports rather than an outright ban, rather than a government rule, imposed on these companies. But the industry has been concerned that this could look like collusion. This could look like, you know, market manipulation to bring down prices or raise prices overseas. Some have noted that there's nothing on the books that would prevent them from colluding in a way that would harm markets overseas. Wow.

I mean, I think they have it built in. Anytime someone suggests sort of a voluntary, multi-company effort to bring prices up or down, it sounds like market manipulation to them. And they're just worried about the after effects of that. So you mentioned Energy Secretary Chris Wright. We know that President Trump is openly saying he's considering this. What are the other people surrounding the president telling him about this? Do we know?

It's unclear exactly where the support. for a diesel ban is coming from, but we are hearing that it's coming from the more politics-minded folks in the administration. What we do know is that there's been sort of broad Republican support for the idea after Senator Chuck Grassley of Iowa pushed the idea. With diesel $6.57 in Iowa, why doesn't President Trump put an embargo on diesel exports like presidents in the 70s put embargoes on ag products because food prices were inflated. High diesel prices are killing farmers' income. Hashtag corn watch. Hashtag soybean watch. All right. Let's talk about the Chuck Grassley of it all. How much of this proposal, this unusual proposal that we tell American companies when and where into whom they can sell diesel comes down to the fact that there are midterm elections in this country in five weeks.

and Americans are quite frustrated about being able to afford the basics. Oh, yeah, I know. It's all about the midterms. So lowering diesel prices, in theory, would make life easier for farmers in Midwestern states like Iowa. In Iowa, there's a competitive race going on for the Senate seat left open by Republican Joni Ernst. The Democratic nominee, Josh Turrick, is leading in some polls. And if he wins, he'd be the first Iowa Democratic. elected to the Senate there in almost two decades. Republicans are also facing some tight races

in Nebraska, in Kansas, and Michigan. All of those races, they think would benefit from a short-term diesel ban or a decline in diesel prices. And the president has definitely shown that he's at least willing to consider market intervention when it serves his political needs or that of his party. Yes, President Trump has been willing to do these things. But is he unique? Has the U.S. ever done something like this before? The United States has never outright banned exports of diesel as a fuel. What we have done in the past, in the 1970s, the U.S. banned exports of crude under Nixon and then Gerald Ford after the Arab oil embargo. We are heading toward the most acute shortages of energy since World War II.

And that export ban stuck around until the presidency of Barack Obama. They made a deal in 2015, 2016 to lift that ban. And that's one of the things that the oil industry fears is the longevity of a potential ban because it's politically very easy to, in an emergency situation, impose a ban on exports of any sort of product. And it's politically difficult to lift that ban because that would mean higher prices for. for consumers, higher prices for your constituents if you're in Congress. So that's another reason that, like, you know, this ban on crude oil exports lasted for 40 years. It didn't need to. It outlived its usefulness technically because there wasn't an Arab oil embargo going on in the 80s,

90s or the 2000s. Some of the examples of President Trump's meddling in the kind of free market capitalism that Americans have gotten used to over, over generations, are really quite stark. The U.S. government under Trump took a stake in Intel, more or less nationalized U.S. steel. President Trump is not saying the United States is going to take a stake in the oil companies here, but he is saying I may need to tell them what to do over and against their objections. Tell me bigger picture where this export ban fits in to the kind of President Trump notion of the way the U.S. economy should work.

Yeah, so it's interesting. The Trump administration has largely left the oil industry alone in terms of direct market intervention. They've done a ton of things around the edges to cut regulations, cut environmental rules, and basically make it easier for oil companies to operate. This is sort of the opposite. And, you know, the oil industry has influential lobbyists, has close ties with the Trump administration. There were a lot of oil donors who gave. tens of millions of dollars to Trump's re-election campaign, the inaugural committee, and that's had some influence. But this is definitely a different approach from Trump on oil. Let me ask you, Leslie, President Trump has made energy dominance a big part of his agenda. We're becoming more and more energy dominant. I don't want to be energy free. We want to be energy dominant in terms of the world. It's called Drill, Baby, If American oil companies are selling less diesel overseas because the president tells them, hey, we need to get prices here at home, those foreign buyers will have to get it from elsewhere,

which means they will find other places to buy diesel from. Couldn't that in the long term, undermine America's sort of status as an energy powerhouse? Yeah, it could. The oil companies are worried that buyers in Europe and Asia could lose trust in them if there's a an outright diesel ban driven by politics. Other countries have been doing this as well, but you're right. The administration has been pushing this line of energy dominance. And I think, you know, early on in the administration, one of the key things that some of the folks on the energy side were tasked with is navigating how to maintain energy dominance amid all of these sort of tariffs, the trade war. How does the country keep its position as a

global supplier of oil, natural gas, and fuel. And it's largely done that. I mean, there's been a lot of pathways that have opened for oil and gas that, I mean, it just hasn't been on country's tariffs list. Now, if it is here, the oil industry is certainly worried that there could be retaliatory bans on products shipped to the United States, which would be another inflationary impact. So, yeah, it could undermine what the U.S. has been driving for under the Trump administration in this sort of energy-dominish push. Colin Eaton for the Wall Street Journal in Houston. Miles Bryan and Avishai Artsy produced today's show.

It was edited by Amina El-Sadi, fact-checked by Gabriel Dunantov, and engineered by David Tadishore and Bridger Dunnigan. I'm Noel King. It's today explained.