Diesel is a terrible thing for an economy to depend on – Marketingwithanoy

want to bring inflation on the heels? There is of course no simple solution, otherwise we would have already done it. But a good place to start would be to cut the economy of gasoline and diesel.

Fossil fuel prices are skyrocketing. According to AAA, gas prices are up more than 75% since last year and diesel is up 55%. There are countless reasons why: Putin’s war in Ukraine, an unexpected surge in demand after early pandemic shutdowns, an East Coast refinery that literally exploded a few years ago, and so on.

The recent surge shows the folly of tying the transportation sector – which accounts for 6% to 12% of GDP in developed countries – to highly volatile consumer goods that are generally bought on a spot price basis.

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According to Mark Zandi, chief economist at Moody’s Analytics, diesel prices alone are responsible for about 17% of the inflation we see today. Inflation in the overall energy sector was close to 30% in April, according to the Bureau of Labor Statistics, more than three times that of anything else. Dropping fossil fuels would cut inflation by nearly a percentage point.

But how do you replace diesel, which flows through such a large part of our economy, from trucks to trains, ocean freight to agriculture? It won’t be easy, but it’s quite simple: electrification.

An electrified economy powered by renewables is less likely to experience sudden price shocks of the kind that oil and gas can cause. This is why.

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