MARY LOUISE KELLY, HOST:
All right, to some other news that the president may not like - the ripple effects of the U.S. war with Iran, which are being felt thousands of miles away, like in Pennsylvania cornfields and New England homes and cramped airplanes across the country. The war has triggered a sharp jump in energy prices, and after more than six months, there's no sign of a turnaround. NPR's Scott Horsley is on that story. Hey, Scott.
SCOTT HORSLEY, BYLINE: Hi, Mary Louise.
KELLY: Start with diesel prices. They hit another record high today. How is that playing out?
HORSLEY: Yeah, diesel's jumped up almost $1 a gallon just in the last month. Prices are up more than 70% since the war started, and the timing of this recent spike is really bad for U.S. farmers who are trying to get their crops in this fall. Rick Telesz is about two weeks away from starting his corn and soybean harvest in Volant, Pennsylvania. And with diesel selling for more than $6 a gallon, he's worried about his fuel bill.
RICK TELESZ: My equipment's not that big, but what I - some of the equipment I have will burn 100, 150 gallons of fuel in a day. You know, it's a cost that a farmer can't pass on.
HORSLEY: Farmers don't get to set their prices. They get whatever the market dictates. And even though crop prices are up a bit this year, Telesz says between the high cost of fuel and fertilizer, he'll be lucky to just break even. For the year, ending in June, farm bankruptcies were up about 19%.
KELLY: Beyond farmers, who else are these high prices hurting?
HORSLEY: Well, the fallout's really widespread, but one group that's particularly vulnerable is people in New England who rely on heating oil to stay warm in the wintertime. Heating oil is a close cousin to diesel fuel, and its price has also soared. Bob Hart is a retiree who lives in Lee, New Hampshire. He ordinarily tries to fill his oil tank in the summertime when the price typically goes down, but that didn't happen this year, and now Hart's wondering how long he can hold out.
BOB HART: We're in for some cooler weather this week with maybe lows in the nighttime in the 40s. But they've already had a couple of frosts up north. Luckily, I have some oil left over from last winter, but I'll try and hold off firing up the furnace until it gets too cold inside.
HORSLEY: Oil companies usually require customers to buy at least 100 gallons of heating oil at a time, and, you know, some families are going to struggle to come up with that much cash.
KELLY: Any relief in sight? Any sign prices may come down soon?
HORSLEY: Unfortunately, most forecasters don't see a lot of relief on the horizon, and, you know, it's not just the spike in crude oil prices that's causing this pain. The cost of refining that crude into products like gasoline and diesel has also soared. Aaron Brady is with S&P Global Energy. He says, even if the Strait of Hormuz were to completely reopen to tanker traffic, which does not look likely, we could still be looking at much higher energy bills well into next year.
AARON BRADY: Things are very tight - not just in the U.S., but globally - and, you know, it all comes back to, we're just short of refining capacity. Some of that has to do with the war in Ukraine. Some of it has to do with the war in Iran. You've got damaged refineries, and, you know, you've got long equipment lead times to repair these things, and you've got depleted inventory levels. That's going to take a while to repair.
HORSLEY: The risk of persistently high energy prices is one reason the Federal Reserve opted to raise interest rates earlier this week. The central bank's on the lookout for signs that higher energy costs might drive up other prices. You see that, for example, with the cost of airfares. They're up more than 23% from a year ago, and that's largely 'cause of costly jet fuel.
KELLY: Scott, is any of this, all of this - is it forcing folks to cut back on spending?
HORSLEY: You would think so, but so far, there's not much evidence of that. Consumer spending, which is the lifeblood of the economy, remains pretty resilient. Earlier this week, we got a report on retail sales for August, and there was no sign of belt tightening. Even though people had to pay more at the gas station last month, they kept right on spending at restaurants and sporting goods stores and, you know, buying stuff on the internet.
KELLY: That's NPR's Scott Horsley. Thanks, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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