Iowa Farmers Feel Diesel Pain as Prices Hit Record Highs, Export Ban Debate Heats Up

Diesel fuel prices have soared to record levels across Iowa and the nation, hitting farmers and consumers hard as the Middle East conflict drags on. With a gallon of diesel now costing $6.52 on average, up 73% from $3.77 before the war with Iran began, Republican leaders are pushing for bold action while economists warn of unintended consequences.

Why diesel prices matter to every Iowan

Diesel powers the tractors that plant and harvest Iowa's crops, the trucks that haul grain to market, and the generators that keep rural communities running. When diesel prices spike, the cost of everything from groceries to construction materials rises with it.

Joseph Brusuelas, chief economist for RSM, put it simply: The price of diesel touches everything in our economy that needs to move. That includes the thing we buy the most of, groceries.

Republican leaders call for action on diesel exports

Iowa Republicans are leading the charge for relief. Rep. Ashley Hinson, who is running for Senate, has called for an immediate end to the war and a ban on selling diesel overseas to boost domestic supply.

Iowans are being squeezed and shouldn't have to foot the bill at the pump or the checkout line for the war in Iran, Hinson said. We need to use every option at our disposal to provide some relief from high prices.

Sen. Chuck Grassley has become the proposal's strongest champion, posting on social media: IF U CAN EMBARGO CHIPS U CAN EMBARGO DIESEL. President Donald Trump has also indicated support, though Energy Secretary Chris Wright clarified Wednesday that nobody wants a full blanket ban of zero exports of diesel.

What's driving diesel prices so high?

The price surge stems from a collision of global events. The Middle East produces a disproportionate share of the oil used to refine diesel, and the closure of the Strait of Hormuz took about 20% of the world's oil off the market. While some supply has returned, it remains far below prewar levels.

Ukraine's attacks on Russian refineries have also removed 800,000 to 1 million barrels per day of diesel from the market, according to S&P Global Energy. Debnil Chowdhury, who leads the fuels and refining team at S&P, noted that a peace deal would make the largest impact on underlying prices.

Economists warn export ban could backfire

The American Petroleum Institute and several economists caution that an export ban could actually raise prices for most Americans. If refineries stop exporting diesel, they would face a surplus with nowhere to store it, forcing them to cut production of gasoline and jet fuel as well.

Phil Verleger, a longtime energy economist who advised the federal government during the 1970s oil shock, warned the ban could ultimately kill the U.S. fossil fuel industry. He pointed to Nixon's 1973 soybean export ban, which drove other countries to Brazil as a more reliable supplier.

Verleger, who comes from an Iowa farming family, understands the pain firsthand: It's terrible economics, the long-term consequences will be horrible. If I were an elected politician, I'd do it.

What's next for Iowa families and businesses?

Small businesses are feeling the squeeze. William Stern, CEO of San Diego-based lender Cardiff, noted that diesel went from under $6 to over $6.53 in just two weeks. You tell me what business, small or even large, budgeted for that, he said.

For Iowa farmers, the stakes are existential. Democratic Senate candidate Adam Hamilton in Kansas told supporters that farmers fear they may not keep their farms. The debate over how to address diesel prices will likely shape the midterm elections, with Republicans pushing for domestic relief and Democrats seeking to harness voter anger over costs and the unpopular overseas conflict.

Frequently asked questions about diesel prices

How much has diesel increased in Iowa?

Diesel prices have risen 73% since before the war with Iran began, from $3.77 to $6.52 per gallon on average nationwide. Iowa prices typically track the national average closely.

Will an export ban lower diesel prices?

Economists are divided. Some analysts believe it could provide short-term relief, but the American Petroleum Institute warns it would likely raise prices for most Americans by disrupting refinery operations and the global supply chain.

What can Iowa farmers do to manage diesel costs?

Farmers can explore bulk purchasing cooperatives, consider fuel-efficient equipment upgrades, and monitor federal and state relief programs. The USDA has historically offered assistance during periods of high input costs.