The Ukraine war is pushing up diesel prices

Kimberly Adams (0:01)

Why the War in Ukraine Is Helping Push Up Diesel Prices From Marketplace in Washington, I'm Kimberly Adams. President Donald Trump met with Ukrainian President Volodymyr Zelenskyy on the sidelines of the UN General Assembly yesterday. Trump urged Zelenskyy to stop attacking Russian energy infrastructure. And Zelenskyy said his side is ready for an energy ceasefire if Russia will do the same. Attacks on Russian oil refineries have contributed to the rising price of diesel in recent months, Marketplace's Henry F reports.

Henry F (0:32)

Ukraine has been attacking Russia's oil infrastructure since 2022 in retaliation for Russia's invasion of Ukraine. But those attacks on Russian oil refineries have intensified this year. Through August, a Russian refinery was hit once every three days on average, according to the International Energy Agency. The agency estimates Russia's diesel production has fallen 30 percent compared to last year. And since July, Russia has banned diesel exports, and it may keep that ban in place for another month or more. President Trump has claimed that the Russia-Ukraine war is more to blame for high diesel prices than the US invasion of Iran. But a Bloomberg analysis last week found the opposite. That the Iran war has caused a significantly larger loss of diesel from the global market than the war in Ukraine. The price of diesel at the pump remains near a record high above $6.50 a gallon in the US. I'm Henry App for Marketplace.

Kimberly Adams (1:25)

The Trump administration announced yesterday that they're removing 760,000 people from the Affordable Care Act or Obamacare roles. Officials say these people are fraudulent enrollees and quote phantoms because of their lack of health care activity and other factors. The White House estimates this move will save the federal government $2.2 billion.

Here's Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz.

Mehmet Oz (1:51)

We're not interested in taking innocent people off the roles. We're interested in protecting them from the bad guys. $2.2 billion is the money that they were stealing from the government. It was the money that people were getting.

Kimberly Adams (2:02)

This is part of the White House's Anti-Fraud Task Force headed by Vice President JD Vance.

The federal jobs report comes out next week, but before that, several Federal Reserve Bank presidents have been out making public comments a week after their latest rate announcement. This week, we also get fresh readings on US manufacturing, new home sales, durable goods, and more. For more context, I'm joined by Susan Schmidt, portfolio manager at Exchange Capital Resources. Good morning, Susan. Good morning. Susan, several Fed bank presidents have been out this week. We have a few more coming later. Talking at various events, have they given us any more context to last week's rate decision?

Susan Schmidt (3:00)

Well, they've certainly given us more information and more hints than Fed chair Kevin Warsh, because he doesn't like to say anything. So investors have really tuned in to what the Fed board members are saying, trying to get a better sense of how things are going to move forward in the Fed's mind with inflation and interest rates. Certainly, we are getting confirmation that the Fed members are watching data and making sure that inflation comes under control. They're not satisfied with current levels, hence we saw that increase last week.

And it is interesting that usually you don't get just one increase from the Fed. There's usually more. We did see that expectations are we'll get another increase in interest rates before the year ends.

Kimberly Adams (3:45)

Later today, we get a new report on US manufacturing. What are you expecting and do you think this reading is going to be affected by the what seems to be never-ending Iran war?

Susan Schmidt (3:57)

What we're hearing from CEOs and companies is that things are going along. Everyone's still cautious about what is happening with the price of oil and how that's going to impact their businesses going forward. I don't think we're going to see any immediate impacts, but certainly the price of oil has gone up again. Now, it's back at $100 a barrel. That will have impacts through the supply chain and will impact prices. We're going to see that and it's going to ultimately affect the consumer's wallet.

Kimberly Adams (4:23)

We also get new home sales for August tomorrow and durable goods on Friday. What can these reports tell us about the health of our economy?

Susan Schmidt (4:32)

Again, more economic indicators, just telling us how things are going.

Investors are looking at this data, not thinking that there's going to be any blowout number. There's no big pressure for up or down movements in these numbers. It is just a steady state. That's one of the confusions that the Fed has had over these last several months and quarters, because the underlying economy and the consumer does seem to stay strong. There's demand for goods. Despite all the changes, think about employment changes, wage rates, labor supply and tariffs. None of that has really bounced the underlying economy that much. That inflation number is what continues to maintain the focus. Investors will look to make sure that those numbers are in line. Manufacturing and housing thus far have been going along really steady as she goes with no big surprises.