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Record refining margins have pushed the US diesel average to $6.53 a gallon

Record diesel crack spreads on top of expensive crude have taken the US pump price to an all-time high. Senator Chuck Grassley wants President Trump to ban the exports, which are also at a record.

The Investor · Invest desk

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Illustration accompanying Record refining margins have pushed the US diesel average to $6.53 a gallon
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What happened

  • The EIA put the national on-highway diesel average at a record $6.529 a gallon on Monday, 24 cents above the prior week and 88 cents above the level of four weeks ago.
  • Diesel costs 74% more than it did a year ago nationally, and California's average reached $8.246 a gallon after weeks above $8.
  • Diesel crack spreads, the rough measure of refinery margins on diesel, are at record levels on top of an already high crude price, which Wolf Richter says produced the record retail figure.
  • Iowa Senator Chuck Grassley urged President Trump to impose a diesel export ban, hoping prices would cool before the midterms.

Why it matters

  • Who has to decide decision Trump now has a request to answer before the midterms, and the answer decides whether US diesel clears at world prices or domestic ones, with refiners' realized margin paying for the second option.
  • What it limits constraint Gasoline flows straight into the September all-items CPI and PCE published in October, while diesel has almost no direct consumer channel, so its cost lands later and in more places, through freight bills and business input costs.
  • Who's exposed exposure Airline fares sit inside the core services measures, so fuel costs reach the part of inflation the Fed reads for stickiness even when carriers hedge.
  • What doesn't add up contradiction The record-export leg of the case rests on EIA weekly data that Richter himself calls the roughest and most volatile measure available, so an 8-week average is what carries it.

Eighty-eight cents in four weeks came off a base of $5.649, which is a 15.6% rise in a month [6]. Run the 74% year-over-year figure backwards and last September's national average was about $3.75 a gallon, so the pump price is roughly $2.78 higher than it was then [7].

The export figure is what the politics runs on. Distillate production averaged 5.1 million barrels a day through August with almost no imports, and exports averaged a record 1.74 million over the past two months [5], or 34% of output [18]. That leaves about 3.36 million barrels a day for domestic use, and keeping every exported barrel at home would add roughly 52% to that volume [19]. Grassley's stated hope is that a ban lets diesel cool before the midterms [4]. Wolf Richter, who assembled the EIA data, writes that the rest of the world is short of diesel and that US refiners supply it [22].

The margin is also where a structural reading of this breaks. A crack spread at a record can compress with crude flat, and the retail price comes down with it, because Richter attributes the record pump price to the record margin sitting on top of an already high crude price [21]. His account does not include refinery capacity or outage figures, so the case that refining is the binding constraint rests on the margin and the export volume.

Gasoline is the faster channel into the published indexes. All grades averaged $4.61 a gallon on Monday, up 16 cents in a week and $1.31 from a year ago [9], which puts last September near $3.30 [20]. Gulf Coast spot jet fuel was $4.418, up 115% in a year and a hair below the May 2022 record [12]. Those two are not the same kind of number: one is a retail average at gas stations, the other a spot price. Airlines hedge part of their fuel and Delta runs its own refinery, so their costs do not track spot, and they are trying to pass the increase to flyers through fares [23].

The broadest measure had already moved before any of this. The GDP price deflator rose 6.4% annualized in the second quarter from the first and 4.4% year over year [14], and Richter expects the third quarter to look worse at the current pace of fuel increases [24]. "I'm worried about the inflationary mindset taking off again. It's the Fed's job to step on the brakes before inflation turns into a runaway train," he wrote [15].

Crude could ease and margins compress, unwinding most of the four-week move before the third-quarter deflator is published. Trump could grant Grassley the ban, in which case domestic diesel decouples downward and refiners absorb the difference in realized margin. The third path is no ban and a world still short of diesel [22], with the 88 cents working through freight rates and business input costs into goods prices over the following quarters [17]. I'd weight that third one highest, and the check on it is simple: if crack spreads compress back toward normal within a month, most of this reverses without any policy at all.

What to watch

  • Whether Trump acts on Grassley's request, and whether any ban covers all exports or sets a quota.
  • Whether diesel crack spreads hold at record levels in the coming weeks or compress back toward normal.
  • The Q3 GDP price deflator, after a Q2 that ran 6.4% annualized.

Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.

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What the record supports and how the coverage leans. The claims behind it follow.

Reality

Evidence68
Adoption76
Hype gap+18
Incentives52
Confidence64

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  1. [1]

    The average US retail price of on-highway diesel spiked 24 cents in the latest week and 88 cents in four weeks, to a record $6.529 a gallon on Monday, according to the EIA.

    Reported SupportedView cited source
  2. [2]

    Year over year, the price of diesel has spiked by 74%.

    Reported SupportedView cited source
  3. [3]

    California diesel prices spiked to $8.246 a gallon, having been over $8 a gallon for weeks.

    Reported SupportedView cited source
  4. [4]

    Iowa Senator Chuck Grassley (R) urged President Trump to impose a diesel export ban, with the hope that such a ban would allow diesel prices to cool before the midterms; Republicans called for a diesel export ban.

    Reported SupportedView cited source
  5. [5]

    Year-to-date through August, the US produced 5.1 million barrels per day of distillate fuel oil (mostly diesel), imported almost none, and exported a record average of 1.74 million barrels per day over the past two months.

    Reported SupportedView cited source
  6. [6]

    The 88-cent four-week gain came off a base of $5.649 a gallon, a rise of 15.6% in a month.

    Derived Supported
  7. [7]

    A 74% year-over-year rise to $6.529 implies an average of about $3.75 a gallon a year earlier, an increase of roughly $2.78 a gallon.

    Derived Supported
  8. [8]

    The weekly diesel export data from the EIA is the most current measure but also the roughest and most incomplete estimate, very volatile from week to week, and seasonal; the 8-week average provides a sense of recent trends.

    Reported Supported Source: Wolf Richter, WOLF STREETView cited source
  9. [9]

    The average retail price of gasoline, all grades combined, spiked 16 cents from the prior week, 39 cents in four weeks and $1.31 from a year ago, to $4.61 a gallon on Monday, nearly matching the May highs.

    Reported SupportedView cited source
  10. [10]

    The average gasoline price in California rolled over $6 a gallon this week.

    Reported SupportedView cited source
  11. [11]

    Gasoline price increases will enter directly into the inflation calculations for all-items CPI and the all-items PCE price index for September, to be released in October.

    Reported SupportedView cited source
  12. [12]

    The spot price of jet fuel spiked 34 cents over the past week, 65 cents in four weeks and 115% from a year ago, to $4.418 a gallon, just a hair below the record of May 2022, per the EIA's weekly Gulf Coast Spot Price.

    Reported SupportedView cited source
  13. [13]

    Airline fares are a component of the core inflation measures and of core services inflation, one of the ways higher energy costs drive up services inflation.

    Reported SupportedView cited source
  14. [14]

    Inflation in the overall economy, measured by the BEA's GDP price deflator, had already spiked in Q2 by 6.4% annualized from Q1 and by 4.4% year over year.

    Reported SupportedView cited source
  15. [15]

    "I'm worried about the inflationary mindset taking off again. It's the Fed's job to step on the brakes before inflation turns into a runaway train."

    Reported Supported Source: Wolf Richter, WOLF STREETView cited source
  16. [16]

    Only a small portion of consumers drive vehicles with diesel engines, so diesel prices impact only a small number of consumers directly.

    Reported SupportedView cited source
  17. [17]

    Diesel, jet fuel and gasoline prices feed into transportation costs consumers pay directly, such as ecommerce shipping charges and airline fares, and are part of input costs for a broad range of businesses, which then try to pass those higher costs on via higher prices.

    Reported SupportedView cited source
  18. [18]

    Record exports of 1.74 million barrels a day equal 34% of the 5.1 million barrels a day of distillate production.

    Derived Supported
  19. [19]

    Production less exports leaves about 3.36 million barrels a day for domestic use, so redirecting all exports home would add about 52% to domestic volume.

    Derived Supported
  20. [20]

    Gasoline up $1.31 year over year to $4.61 implies about $3.30 a gallon a year earlier.

    Derived Supported
  21. [21]

    Diesel crack spreads, a rough measure of US refinery profit margins for diesel, are at record levels, and they come on top of the high price of crude oil; the result is a record high retail price of diesel.

    Reported ContestedView cited source
  22. [22]

    There is a shortage of diesel in the rest of the world, and US refiners provide much needed supply.

    Reported Insufficient Source: Wolf Richter, WOLF STREETView cited source
  23. [23]

    Many airlines hedge part of their fuel purchases and Delta operates its own refinery, so their cost increases do not exactly track the spike in the spot price of jet fuel, but they are trying to pass those cost increases to flyers via higher ticket prices.

    Reported InsufficientView cited source
  24. [24]

    For Q3, at the current pace of those fuel-price increases, these overall inflation measures will look even worse.

    Reported Insufficient Source: Wolf Richter, WOLF STREETView cited source

Sources

2 independent publishers whose own reporting we read for this story.

  1. cryptobriefing.com

    1 article · September 23, 2026

    US diesel prices reach record $6.53/gallon amid Iran conflict
  2. seekingalpha.com

    1 article · September 23, 2026

    $6.53 Diesel U.S. Average, $8.25 In California, Worsens Already Hot Inflation, Amid Record U.S. Diesel Exports; Gasoline And Jet Fuel Prices Also Spike
  3. wolfstreet.com

    1 article · September 22, 2026

    $6.53 Diesel US Average, $8.25 in California, Worsens Already Hot Inflation, amid Record US Diesel Exports. Gasoline & Jet Fuel Prices also Spike

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