When the Czech-Canadian scientist Vaclav Smil observed that a greenhouse tomato embeds the equivalent of about five tablespoons of diesel, he identified an enduring truth: Fossil energy is woven through everything on a shelf or menu.
In 2026, that truth has become apparent to retailers and restaurant operators.
Price shocks
Since the Strait of Hormuz was effectively closed with the outbreak of war in Iran on Feb. 28, the retail price of diesel has climbed from $3.72 a gallon to more than $5 in the United States.
Ukraine’s attacks on Russian energy production facilities have only added to the pricing pressure. As of mid-July, Kpler, a maritime data firm, put Russia’s refinery downtime near 4.3 million barrels per day, roughly 58% of national capacity, leaving Russia’s refinery runs at a 21-year low.
As a result, Russia, the second-largest diesel exporter at roughly 11% of global supply, banned exports on July 8 through end of the month to protect domestic supply.
Middle-market retailers and restaurants running on thin margins must plan for costs to remain higher for longer.
How the shock travels
By the time a product reaches the shelf or plate, it carries the stacked fuel costs of every stage behind it, and those costs hit on very different time frames.
Direct freight diesel
The most immediate channel is the physical movement: Goods are trucked, often several times, from farms or ports through distribution centers to stores with refrigerated units burning extra diesel to stay cold.
Last year, American Transportation Research Institute data via Fleet Owner put fuel at about a fifth of the cost to run a truck, roughly $0.48 of the $2.34 per mile, and refrigerated carriers run margins below 1% so the surcharge of higher fuel costs passes straight to the buyer.
That surcharge is pegged to the Energy Information Administration’s weekly diesel index, so when the pump price jumps the shipper is affected within days, the closest thing to a real-time pass-through in the chain.
Farm and fishing diesel
This diesel is burned before the product ever ships: It is used to run tractors and combines, and provide irrigation to grow food. Gas is used to heat greenhouses. Fishing is hunting with diesel, as boats burn fuel with no substitute and no way to hedge the catch.
What distinguishes this channel is that it is a production cost, so it re-prices at the commodity level on a harvest-cycle lag rather than instantly.
A shock hits hardest on high-embedded-cost categories: beef, seafood and out-of-season produce, far more than grains. In Smil’s book “How the World Really Works,” he puts a kilogram of wild-caught fish at roughly 700 milliliters of embedded diesel versus 250 milliliters for bread.
Fertilizer
Nitrogen fertilizer is made from natural gas, both energy and feedstock, making it a second-order channel. About 20% of the world’s LNG transits through the Strait of Hormuz, according to the International Energy Agency, and more than a third of urea exports also goes through the strait.
In March, Iran halted ammonia output, and Qatar suspended urea, ammonia and sulfur production after its production facilities were damaged in attacks, according to Chemical Market Analytics. Adding to the squeeze, plants in India, Egypt and Bangladesh reduced urea production because of lower LNG supplies.
Urea climbed above $850 per metric ton by April, an 80% increase since February and the highest level since April 2022 as regional production outages intensified, according to Bloomberg. The World Bank warned the global fertilizer index could rise more than 30% across 2026 if the disruption persists.
Because fertilizer is applied by crop cycle, a spring spike shows up in the fall harvest and next year’s planting, long after the headlines fade, turning a one-quarter oil event into a year-long food-cost regime.
Plastics and packaging
Packaging traces back to oil and gas, and shows up in everything from wrapping to food-service disposables to the packaging-heavy delivery and takeout business.
It is the quiet channel: A few cents of resin per package is invisible on one item but compounds across millions of units and every SKU in a store.
Packaging is also harder to engineer out. While operators can drop beef from the menu, you still package whatever replaces it, and for restaurants, packaging climbs alongside delivery costs.
Why restaurants feel it faster than grocers
Grocers run a cost-plus, pass-through model. When wholesale prices rise, shelf prices move within days. Because groceries are essential and competitors move together, shoppers largely absorb it.
Restaurants reprice slowly. Menus are printed, price points are psychological, and every increase risks traffic. Menu inflation lags input inflation, and the lag is eaten at the margin.
Additionally, the same shock that raises a restaurant’s costs also raises its customers’ gas and grocery bills, pushing discretionary diners to trade down or eat at home.
This is the K-shaped economy playing out on the menu, as value and premium concepts hold their ground while the middle erodes. Midmarket casual dining, too expensive to be a bargain, too ordinary to be a treat, takes the brunt.
That trade-down transfers share toward grocers, which capture the food-at-home substitution even as restaurants lose both margin and traffic.
Grocery net margins are thinner in absolute terms, about 2% versus 3% to 8% for full-service restaurants; but faster pass-through and inelastic demand make the model far more resilient.
Hedging higher for longer costs
Operators can blunt elevated costs and their delayed effects on several fronts.
- Rebuild the freight-cost relationship: Renegotiate carrier contracts around transparent, indexed and capped surcharge formulas and weigh private-fleet versus for-hire, since owning fuel exposure can beat paying volatile surcharges when diesel is structurally high.
- Hedge the inputs financially: Use diesel or heating-oil futures, swaps and cap-and-collar structures, extended to fertilizer-linked commodities and natural gas, to turn a volatile cost into a more consistent one.
- Engineer the menu and assortment: Shift the mix toward lower-energy inputs, favoring chicken and pork over beef, in-season over greenhouse and air-freighted, and domestic over imported.
- Sharpen pricing agility: Move prices in weeks, not quarters, using digital menus and shelf pricing, surgical increases in inelastic items, and protection of the value tier that holds traffic.
- Model it before you need to: Stress-test your P&L at $5 to $6 diesel and elevated fertilizer down to the SKU level, so you are not rebuilding your cost base mid-shock.
The takeaway
These four channels do not arrive together: Freight diesel hits in days, packaging in weeks, harvest costs in a season, and fertilizer in a full crop cycle. That stagger is why the shock outlasts the headline. Long after crude eases, the slow channels are still reaching the shelf. The operators that price it in early will be standing when costs finally fall.
