Someone Always Pays for the War at the Pump

Cuando Irán tiene problemas, el mercado tiene problemas.

When Iran has problems, the market has problems.

Es muy simple.

It's very simple.

Now, diesel specifically.

People sometimes think of diesel as the truck driver's fuel and tune it out, but that's a mistake.

Diesel moves freight.

It moves the food on the shelves, the packages at your door, the lumber at the hardware store.

When diesel prices spike, everything gets more expensive, with a lag.

En España también sentimos esto.

In Spain we felt this too.

El diésel es muy importante para los camiones y para la agricultura.

Diesel is very important for trucks and for agriculture.

Cuando el precio subió mucho en 2022, los agricultores protestaron en las carreteras.

When the price rose a lot in 2022, farmers protested on the roads.

Fue un momento de mucha tensión política aquí.

It was a moment of great political tension here.

And that political dimension is real.

The AAA report specifically mentions 'squeezing voters,' which is a phrase that tells you a lot about where people's heads are right now in the U.S.

High fuel prices have ended presidencies.

Jimmy Carter learned that.

Es interesante porque en Europa, los precios de la gasolina y el gasoil siempre fueron más altos que en Estados Unidos, porque los impuestos son más altos.

It's interesting because in Europe, gasoline and diesel prices were always higher than in the United States, because taxes are higher.

Pero en América, la gente está acostumbrada a precios muy bajos.

But in America, people are used to very low prices.

Entonces cuando suben, la reacción política es muy fuerte.

So when they rise, the political reaction is very strong.

That's a real cultural gap, actually.

When I was based in Buenos Aires, I'd come back to Austin and the price at the pump always felt almost scandalously cheap compared to Europe or Latin America.

Americans have a kind of psychological contract with cheap fuel.

It's almost part of the national identity.

Sí, y eso es un problema.

Yes, and that's a problem.

Porque cuando el combustible es muy barato, la gente no piensa en la eficiencia energética.

Because when fuel is very cheap, people don't think about energy efficiency.

Compran coches grandes, viven lejos del trabajo, usan mucha energía.

They buy big cars, live far from work, use a lot of energy.

Y cuando llega una crisis, el impacto es más grande.

And when a crisis arrives, the impact is bigger.

Fair point.

Though I'd push back slightly on the framing, because the U.S.

is actually in a dramatically different energy position than it was in 1973 or even 2008.

The shale revolution made America a net energy exporter.

So why is a war in Iran hitting American diesel prices this hard?

Porque el petróleo es un mercado global.

Because oil is a global market.

Si hay un problema en el Golfo Pérsico, los precios suben en todo el mundo, también en Estados Unidos.

If there's a problem in the Persian Gulf, prices rise everywhere in the world, including in the United States.

No importa si América produce mucho petróleo.

It doesn't matter if America produces a lot of oil.

El mercado internacional conecta todos los precios.

The international market connects all prices.

Right, it's fungible.

A barrel of oil is a barrel of oil, and it gets priced globally.

The idea that producing more domestically fully insulates you from world events, that's always been a bit of a political myth rather than an economic reality.

Y hay otro problema específico con el diésel.

And there's another specific problem with diesel.

Las refinerías no producen solo diésel.

Refineries don't produce only diesel.

Producen diésel y gasolina y otros productos al mismo tiempo.

They produce diesel and gasoline and other products at the same time.

Cuando hay disrupciones en el suministro de petróleo bruto, el precio del diésel a veces sube más que la gasolina normal.

When there are disruptions in the crude oil supply, the price of diesel sometimes rises more than regular gasoline.

Which is a technical point that tends to get lost in the political noise.

The refinery margin, the crack spread in industry terms, can amplify diesel price movements well beyond what the crude oil price alone would predict.

And American refining capacity has been constrained for years.

Mientras tanto, en Europa, la situación también es difícil.

Meanwhile, in Europe, the situation is also difficult.

Ya tenemos la crisis del calor y la sequía, que afectó a la agricultura francesa.

We already have the heat and drought crisis, which affected French agriculture.

Y ahora los precios del gasoil más altos hacen todo más caro para los agricultores y los transportistas.

And now higher diesel prices make everything more expensive for farmers and transport companies.

France just announced over a billion euros in agricultural support this week, which is not coincidental timing.

When you layer a record drought on top of a fuel crisis, farmers are getting squeezed from both ends: costs up, yields down.

Y esto es algo que los gobiernos europeos conocen bien.

And this is something European governments know well.

Después de la guerra de Ucrania en 2022, muchos países europeos pagaron dinero directamente a las familias y a las empresas para ayudar con los precios de energía.

After the Ukraine war in 2022, many European countries paid money directly to families and companies to help with energy prices.

Fue un gasto enorme.

It was an enormous expense.

And here's the paradox that I keep circling back to: every one of these energy crises, 1973, 1979, 2022, now 2026, accelerates the conversation about renewables.

Solar, wind, electrification of transport.

The crises basically do the work that carbon pricing advocates couldn't get done politically.

Tienes razón, y España es un buen ejemplo.

You're right, and Spain is a good example.

Después de 2022, España invirtió mucho más en energía solar y eólica.

After 2022, Spain invested much more in solar and wind energy.

Ahora, en algunos meses, España produce casi toda su electricidad con energías renovables.

Now, in some months, Spain produces almost all its electricity with renewable energy.

Fue una transformación muy rápida.

It was a very rapid transformation.

That's actually remarkable.

I didn't know Spain had moved that far that fast on the electricity side.

Though I want to flag that electricity and diesel for freight trucking are still two different problems.

You can green your grid much faster than you can electrify a fleet of eighteen-wheelers.

Completamente de acuerdo.

Completely agree.

Los camiones eléctricos grandes todavía son muy caros y la infraestructura no existe en muchos lugares.

Large electric trucks are still very expensive and the infrastructure doesn't exist in many places.

Entonces en el corto plazo, los transportistas no tienen opciones.

So in the short term, transport companies have no options.

Necesitan el gasoil, y tienen que pagar el precio que hay.

They need the diesel, and they have to pay whatever price exists.

Captive demand.

Which is exactly why diesel is such an effective political lever, and why this number, five eighty-five, lands differently than a gasoline price spike.

A commuter can theoretically take the bus.

A trucker hauling refrigerated produce across Nevada cannot.

Y al final, ese precio llegó a los supermercados y a las tiendas.

And in the end, that price reaches the supermarkets and the stores.

Los consumidores pagan el precio del petróleo cuando compran comida, cuando compran ropa, cuando compran casi cualquier cosa.

Consumers pay the price of oil when they buy food, when they buy clothes, when they buy almost anything.

La cadena de suministro conecta todo.

The supply chain connects everything.

There's a statistic I keep in my head from my reporting days: almost every physical product you buy has been on a diesel-powered truck at least once, usually more.

The de-materialized economy, apps and streaming and finance, those exist in a physical world still running on oil.

Entonces la pregunta importante es: ¿cuánto tiempo va a durar esta situación?

So the important question is: how long is this situation going to last?

Si la guerra de Irán termina pronto, los precios pueden bajar.

If the Iran war ends soon, prices can fall.

Pero si el conflicto continúa por muchos meses, la inflación puede volver con mucha fuerza en Estados Unidos y en Europa.

But if the conflict continues for many months, inflation can come back with a lot of force in the United States and in Europe.

And the Federal Reserve is sitting there with very few good options.

Raise rates to fight inflation, you risk choking a slowing economy.

Don't raise rates, inflation expectations start to become unanchored.

It's the exact same trap as 1979.

The more I look at this, the more the historical rhymes feel uncomfortable.

La historia no se repite exactamente, pero tiene patrones similares.

History doesn't repeat exactly, but it has similar patterns.

Y lo que aprendemos de 1973 y 1979 es que las crisis de energía cambian las economías durante mucho tiempo.

And what we learn from 1973 and 1979 is that energy crises change economies for a long time.

No es solo un problema de precios durante unos meses.

It's not just a pricing problem for a few months.

Las consecuencias duran años.

The consequences last for years.

And the political consequences last even longer.

The stagflation of the late seventies arguably put Reagan in the White House.

Economic pain has a very long electoral half-life.

People remember paying five dollars a gallon long after the price comes back down.

Eso es verdad en Europa también.

That's true in Europe too.

Cuando los precios de la energía subieron mucho en 2022, muchos gobiernos perdieron apoyo popular.

When energy prices rose a lot in 2022, many governments lost popular support.

La gente conecta los precios de energía con la competencia del gobierno, aunque los gobiernos no controlaron esos precios directamente.

People connect energy prices with government competence, even though governments didn't directly control those prices.

Which is genuinely unfair in one sense and completely understandable in another.

You're the person in charge, the price at the pump doubles, you own it whether the cause was a war on the other side of the world or not.

That's the unforgiving arithmetic of democratic accountability.

Y mientras tanto, las compañías petroleras ganaron mucho dinero en 2022.

And meanwhile, oil companies made a lot of money in 2022.

Sus beneficios fueron enormes.

Their profits were enormous.

Muchos ciudadanos pensaron que era una situación muy injusta: ellos pagaron más, y las compañías ganaron más.

Many citizens thought it was a very unjust situation: they paid more, and the companies earned more.

Fue un momento de mucha tensión social.

It was a moment of great social tension.

The windfall profits debate.

Which is as old as the oil industry.

There were serious windfall profits taxes proposed in the U.S.

after the 1979 crisis.

They passed, actually, and then got quietly unwound over the following decade.

The cycle is almost tediously predictable at this point.

Para terminar, creo que la historia del precio del diésel en 2026 es realmente la historia de cómo el mundo todavía depende mucho del petróleo.

To close, I think the story of the diesel price in 2026 is really the story of how the world still depends very much on oil.

Y mientras esa dependencia continúa, los conflictos geopolíticos van a tener un impacto enorme en la economía de todos.

And while that dependence continues, geopolitical conflicts are going to have an enormous impact on everyone's economy.

Well put.

And that dependence is exactly what makes the transition to renewables not just an environmental argument but a national security argument, an economic stability argument.

Every time we have this conversation it comes back to the same uncomfortable truth: the world built itself around a resource it can't fully control.

Actually, Octavio, something you said earlier is sitting with me.

You called it 'gasoil' at one point, not 'diésel.' And I've heard that before in Spain.

Are those the same thing, or am I going to embarrass myself ordering at a gas station again?

Sí, son la misma cosa pero con nombres diferentes.

Yes, they're the same thing but with different names.

En España, usamos 'gasoil' mucho, especialmente cuando hablamos del combustible para coches y camiones.

In Spain, we use 'gasoil' a lot, especially when talking about fuel for cars and trucks.

'Diésel' también existe, pero 'gasoil' es más común en el lenguaje cotidiano aquí.

'Diesel' also exists, but 'gasoil' is more common in everyday language here.

So 'gasoil' comes from the English 'gas oil,' which is actually an old refinery term.

And Spain just kept it.

Meanwhile in Latin America, from what I understand, they tend to use 'diésel' much more.

Same fuel, completely different word depending on which side of the Atlantic you're on.

Sí, exacto.

Yes, exactly.

Y la gasolinera donde compras el gasoil también tiene nombres diferentes.

And the place where you buy the gasoil also has different names.

En España decimos 'gasolinera' o 'estación de servicio.' En México dicen 'gasolinera' también, pero en Argentina puedes escuchar 'estación de nafta.' La nafta es la gasolina normal en Argentina.

In Spain we say 'gasolinera' or 'estación de servicio.' In Mexico they also say 'gasolinera,' but in Argentina you can hear 'estación de nafta.' Nafta is regular gasoline in Argentina.

Nafta.

That stopped me cold the first time a Buenos Aires cab driver said it to me.

I kept thinking of the North American Free Trade Agreement.

Spanish has this beautiful way of taking technical English words, absorbing them, and making them completely its own.

Though I'll probably still say 'diésel' and sound like a tourist.

Fletcher, en España siempre vas a sonar como un turista.

Fletcher, in Spain you're always going to sound like a tourist.

Pero al menos ahora sabes pedir gasoil.

But at least now you know how to ask for gasoil.

Es un progreso.

It's progress.