Diesel Refining Crisis Keeps Prices Above $5 Through Q4

The persistent elevation of diesel prices above $5 per gallon stems not from crude oil scarcity, which remains relatively stable in the $80 range, but from a fundamental **refining capacity crisis**. According to Aaron Decker, CEO of Multi-Service Fuel Card, crack spreads (the margin between crude and refined product) have exploded to over $100 per barrel, far exceeding the historical norm of $15–$25. This signals severe structural imbalance in global refining markets. Multiple factors converge to tighten supply.

Ukrainian drone strikes have disabled Russian refineries that previously offset global shortfalls, while U.S. Gulf Coast refineries are diverting elevated exports to international shortage markets, simultaneously draining domestic inventory and consuming valuable refining capacity. Ultra-low distillate inventories, now at levels unseen since the early 2000s, represent a critical vulnerability. Decker anticipates diesel will remain north of $5 for the foreseeable future, a forecast aligned with updated EIA modeling.

For supply chain and fleet operations, this translates to structural cost pressures that cannot be hedged through traditional procurement strategies alone. While fewer than 10% of carriers pay full retail diesel prices, most fleets using fuel surcharge mechanisms tied to retail benchmarks face margin compression. Risk managers should monitor weekly Hormuz tanker traffic, Russian refinery operational status, and U.S. distillate inventory reports as leading indicators, while hurricane season (Q3–Q4) adds tail-risk exposure to Gulf Coast infrastructure.