Rising diesel prices could push costs higher for Atlanta businesses and consumers

Metro Atlanta families are already feeling the effects of inflation — from higher grocery bills and household goods to rising costs for cars, clothes, and housing.

Now, another price increase could quietly make many of those things even more expensive: diesel fuel.

According to AAA, the average price of diesel in Atlanta was over $5 a gallon on Monday.  For many Atlanta businesses, that number matters, and if prices continue climbing, analysts say the effects could eventually ripple through the broader economy.

For companies like Caldwell Tree Service in Roswell, diesel isn't just another line on the balance sheet. It's what keeps the business running.

"This big truck you're standing in front of gets four miles to the gallon," said owner Kevin Caldwell. "And diesel is, what, $5 and something a gallon? I mean, you can burn hundreds of dollars in fuel every day for one job."

Additionally, Fuel costs could have an impact on employees who are simply heading to work.

"We're sensitive to them having a 30% or 40% increase in their cost to commute," Caldwell said. "So the first thing we're going to do is work on giving them stipends to help offset that."

Nationally, diesel powers a large portion of the supply chain, including delivery trucks, construction equipment, farm machinery, and shipping fleets.

When prices rise sharply and stay high, economists say the costs can eventually work their way through the broader economy.

But short-term spikes don't necessarily mean consumers will feel immediate effects, according to Raymond Hill, an economist at Emory University.

"Nobody wants higher gasoline prices or higher diesel prices," Hill said. "But if we look back to last fall, households were spending the lowest percentage of their income on gasoline in decades."

"Don't panic," Hill continued. "The bigger concern is how long higher prices last, not simply how high they climb.

While the increases are here, Hill said the question economists are trying to figure out is how long they'll persist.

Even if geopolitical tensions disrupt global energy supplies, Hill says increased U.S. oil production could help offset some of the pressure.

Large shipping companies have typically adjusted fuel surcharges to account for changes in diesel prices.

In a statement to CBS News Atlanta, UPS said it regularly updates those surcharges to reflect fuel costs:

"UPS updates its fuel surcharge to reflect the changes in the costs we incur for fuel to serve our customers … aligned with the U.S. Average On-Highway Diesel Fuel Price."

Its own website shows UPS ground transportation surcharges have risen about 5.5% since January.

For some small Atlanta businesses already facing higher costs for labor, materials, and insurance, diesel prices are another unpredictable expense.

"It's not our goal to raise prices," said Jim McKinney of Peachtree Movers, an Atlanta moving and storage company. "We don't want to raise prices. We have to sometimes, but we do it very reluctantly."

If fuel prices remain elevated, he says businesses like his may eventually have to pass those costs on to consumers.

"And after that, if it's still up, we're really going to have to look at raising the cost of storage for the customer," McKinney said.

For Caldwell, the biggest challenge is uncertainty.

"We don't even know what gas is going to be tomorrow," he said. "If you make an adjustment, are you trying to get out in front of it? And then are you going to have to make that adjustment again?"

For now, analysts say it could take months, not weeks, before higher diesel prices significantly affect local businesses and begin showing up in consumer prices.