Texas Declares a Diesel Disaster as 16 Trucking Companies Go Bankrupt and Consumer Confidence Hits a 12-Year Low

Texas Gov. Greg Abbott declared a statewide disaster Monday over diesel prices. In the same stretch, at least 16 trucking companies landed in bankruptcy court, Iowa farmers started saying out loud that they might lose family farms, and on Tuesday the Conference Board reported that Americans’ confidence in the economy fell to its lowest level since 2014.

Any one of those would be a bad news day. Together they tell one story. The fuel shock from the Iran war has moved off the gas station sign and into the businesses that move food and pay people. Freight, farms, used cars, credit cards and commercial real estate are all showing the same strain at once, and the Federal Reserve just raised interest rates on top of it.

You’ll feel it first at the grocery store, because nearly everything on the shelf rode on a diesel truck. Next it shows up in what it costs you to borrow, on your credit card and your car loan. If it keeps going, it shows up in whether you still have a job. This morning we published The AI Bubble Is Cracking, and This Economy Can’t Take Another Hit, where we said the economy was already running on fumes.

What Texas Did…

Abbott’s order lets truckers run dyed diesel on public roads. That’s the red-tinted, untaxed fuel normally meant for tractors and off-road equipment. It also raises the weight limit on fuel, crop and timber loads to 95,000 pounds and suspends the state’s low-emission diesel rules where the EPA allows. It doesn’t touch the 20-cent state fuel tax, which Democrats have been pushing him to waive.

AAA had Texas diesel at $5.86 a gallon on Monday. In early February, before the U.S. and Israel struck Iran, it was $3.30. A trucker filling two 100-gallon tanks is paying about $500 more per fill-up than he was last winter.

Truckers Are Going Under First

FreightWaves counted at least 16 trucking, delivery and transportation companies that filed for bankruptcy between late August and September 21. The Independent tallied more than 250 jobs tied to those filings. About half are Chapter 7 liquidations, which means the trucks get sold and the company is gone.

The list runs from one-truck operators in Garland and McKinney to Xoco Transport in Hidalgo, Texas, a carrier with about 65 drivers that filed for Chapter 11 on September 16. Diesel hit a national record of $6.53 this month, but fuel isn’t the only thing crushing carriers. Insurance, maintenance and labor keep climbing, and freight has slow months when a small carrier can’t raise rates enough to cover any of it.

The industry was already shrinking before this. Truck transportation employed 1.47 million people in August, about 118,000 fewer than at the October 2022 peak.

Iowa Farmers Say It’s Getting Bad

In Iowa, farmers told Axios that diesel is up nearly 80 percent since the Iran war began. That lands on top of tariffs that raised the price of fertilizer, pesticide and equipment and soured trade with Canada, which buys about 30 percent of Iowa’s exports. Some farmers are cutting back on how much they run their machines and looking at loans just to get through.

Mark Mueller farms near Waverly and runs the Iowa Corn Growers Association. He told Axios his operation is scraping by, that he can easily see more farmers going bankrupt or retiring, and that some are saying they can’t leave the farm to their sons. He also pointed to rising interest rates, which hurt farmers who borrow to plant and pay it back after harvest. Julius Schaaf, a retired corn and soybean farmer in Fremont County, said the swings are “just absolutely wiping them out” when it comes to younger farmers without a cushion.

Americans Can See It Coming

The Conference Board said Tuesday its Consumer Confidence Index fell 6.7 points to 81.9 in September, the lowest reading since 2014. More people said their family’s finances were bad than good, only the second time that’s happened since the question was added four years ago. The board’s chief economist said people’s complaints about prices, and oil and gas in particular, hit new highs.

The Fed isn’t coming to the rescue. On September 16 it raised rates for the first time since 2023, to a range of 3.75 to 4 percent, and signaled another hike before the end of the year. That’s the Fed fighting fuel-driven inflation by making money more expensive for the same farmers and truckers already going under.

In fairness, the job market is still holding up. Job openings dipped in August, but layoffs slipped too. So far the damage is in what things cost, and in how far behind people are getting on their bills.

The Debt Is Starting to Crack

Used cars. Edmunds says the average 3-year-old used vehicle sold for a record $32,461 in the second quarter. At the bottom of the market, a $10,000 to $15,000 budget now buys a car that’s almost 9 years old with about 98,000 miles on it. In 2019, the same money bought a car about four years newer with 40,000 fewer miles. That’s the car a young worker or a family replacing a dead minivan can afford, and it’s the one most likely to need a big repair right when money is tight.

Credit cards. The New York Fed’s second-quarter data shows about one in ten dollars of credit card debt held by Americans under 30 slid 90 days or more past due over the past year, roughly double the 2021 rate. Borrowers over 70 are falling behind at rates the Fed’s data hasn’t shown since around 2011. Those are the two groups with the least room: young people who haven’t built savings, and retirees on fixed incomes putting groceries on plastic.

Office buildings. Trepp data cited by Bloomberg puts the delinquency rate on office loans in commercial mortgage-backed securities at 12 percent in August. That’s just under the record set earlier this year and higher than the peak after the 2008 crash. One of every eight dollars in those loans is behind. Bloomberg found almost $40 billion of the $64 billion in office bonds coming due this year and next is already in trouble. One tower bought for $712 million in 2015 was recently appraised at $195 million.

Empty office towers might sound like a Wall Street problem. But those bonds sit in pension funds, insurance companies and bank portfolios, and when a building loses two-thirds of its value, somebody eats that loss. Trepp’s rate of commercial loans in special servicing, meaning loans already in workout, is at its highest level since early 2013.

We’ve Seen This Before

The 1970s. The last time a Middle East oil shock drove prices this hard, the Fed spent the rest of the decade chasing inflation. Families got stagflation, meaning prices kept rising while the economy stalled, and mortgage rates eventually topped 18 percent in 1981. Raising rates into a fuel shock is the same playbook, and it hurt a lot of working people before it worked.

The 1980s farm crisis. High interest rates and collapsing land values wiped out family farms across the Midwest in the early ’80s, and rural towns never fully came back. Mueller told Axios this isn’t the ’80s yet, and he’s probably right. But the ingredients are the same ones: borrowed money, rising rates, and costs farmers can’t pass along to anyone.

In August we laid out in The AI Bubble Is Holding Up the Economy how data center spending was making the headline numbers look better than regular people felt. This morning we followed up with how that money is starting to wobble. Today’s news is the other half of the picture. The part of the economy that grows and moves food is already in bankruptcy court, consumers already say they feel broke, and the Fed is tightening.

Diesel stocks are about 600 million gallons short going into winter, and as we covered last week, the Fed itself now says supply shocks are here to stay. In a normal year, an AI pullback or a trucking shakeout would be painful but survivable. This year there’s no cushion left to absorb either one. I don’t think people understand how thin the ice is right now.

Every dollar of diesel that truckers and farmers can’t absorb ends up in the price of your groceries. Every carrier that liquidates means fewer trucks and higher freight rates the next time demand picks up. Every rate hike shows up on your credit card APR within a billing cycle or two.

The people getting hit hardest are the ones with the least slack: the 25-year-old making payments on a 9-year-old car, the retiree carrying a grocery balance, the young farmer who borrowed to get started and now can’t make the numbers work. They didn’t start a war or set interest rates, and they’re the ones paying for both. It’s a damn shame, and it’s going to get worse before it gets better.

How to Prep for What Is Coming

You don’t need to guess the day things break. You need a household that can take higher prices, higher rates and a lost paycheck in the same year.

Build a cash cushion. Trucking and farming are shedding jobs first, and layoffs spread from there. Work toward three to six months of expenses, and keep a couple of weeks of cash at home. Our 90-day plan is in Job Loss Is the Most Likely SHTF Event You’ll Ever Face.

Go after variable-rate debt now. The Fed has already said another hike is coming. Credit card balances get more expensive every time it moves, so pay those down before anything else, and don’t take on new ones.

Keep your current car running. With 3-year-old used cars at record prices and cheap cars showing 100,000 miles, this is a terrible market to buy in. Spend a few hundred dollars on maintenance now instead of $30,000 on a replacement later.

Stock the pantry before diesel reaches the shelf. Freight costs work into food prices with a lag. What you buy this month is cheaper than what you’ll buy in January. Start with what your family actually eats, using Long-Term Food Storage: What Actually Lasts 25 Years.

Build a Community. When money is tight, a neighbor with a truck, a friend who hears about job openings, or a local farmer who’ll sell you beef direct is worth more than anything in your 401(k). We walk through building that in Prepper Communities: Building a Survival Network in Troubled Times.

Learn skills that cut costs. Basic car repair, cooking from scratch and gardening all save real money in a downturn, and some of them can bring in money too. Pick your next one from 30+ Self-Reliant Resources: Preparedness Skills that Everyone Should Know.