Diesel Hits $6.33/Gallon, 50 Cents Above Prior Record

Why did diesel just break $6 per gallon?

Diesel hit $6.33 per gallon this week, 50 cents above the previous record, and Tom Kloza says the worst may still be ahead. The chief energy advisor at Gulf Oil told FreightWaves that trucking operators should not expect relief over the next 100 days, with geopolitical disruptions, seasonal demand, and constrained refining capacity all pushing prices higher.

The closure of Saudi Arabia's East-West pipeline is compounding an already strained supply picture. Kloza said the shutdown, which Secretary of Energy Chris Wright described as lasting days, could run 40 to 50 days. Saudi Arabia has suspended oil-loading for September deliveries to Europe. The pipeline also feeds refineries along the Red Sea that the Saudis control, representing about 1.8 million barrels per day of refining capacity, or roughly 2% of global throughput.

Combined with earlier losses, the world has already shed about 7 million barrels per day of refining capacity, mostly in Russia and the Persian Gulf. "You know, you're talking about $9 and $10 in Europe and you're talking about $8.27 in California right now," Kloza said. "These are the kind of numbers that you would call stupid numbers if somebody suggested them a while ago."

What the pump lag means for your fuel bill

Truck-stop margins have tightened as retail prices lag wholesale costs. Kloza noted that average truck-stop fuel margins have moved from about $0.04 per gallon to roughly $0.07, while retail pump prices typically run $0.40 over cost. That means significant catch-up pricing is still ahead. Higher sticker prices deter drivers from buying higher-margin in-store goods, hitting travel centers doubly.

Kloza also noted that only about 2% of fuel purchases at large travel centers are now made at the retail pump price, with the vast majority flowing through discount programs and apps that have expanded over the past five years. That shift means most owner-operators and small fleets are already seeing wholesale-linked pricing move faster than the pump number suggests.

One lever Washington could pull

Kloza identified one potential price-dampening lever for the federal government: threatening export curbs on refined products. He said most analysts view actual export restrictions as bad policy for refiners, but that a credible threat alone could flush speculative money out of the diesel and gasoline futures markets, where he said "hot money" has been positioned for higher prices, unlike in crude oil markets.

For the first time in roughly seven to eight years, soybean oil, the primary feedstock for biodiesel and renewable diesel, dropped below the price of traditional diesel. Kloza said existing biodiesel and renewable diesel plants are running at full capacity given surging margins, and that new production could come online in months rather than the years required to permit a conventional refinery.

What small fleets should plan for

Kloza said $3-per-gallon diesel is likely behind us for at least the next 15 to 16 months. He cautioned that heating demand in the Northeast, where the diesel and heating oil molecules are interchangeable, will add further pressure on distillate supplies as temperatures fall. That seasonal squeeze typically hits hardest in November through February.

For a five-truck fleet running 500 miles per truck per day at 6 mpg, the 50-cent jump from the prior record adds roughly $208 per day, or $6,250 per month, to the fuel line. If Kloza is right and prices climb further over the next 100 days, that delta grows. Fleets without fuel surcharge clauses in their contracts or owner-operators running spot are absorbing the full hit. Those with surcharges tied to the Department of Energy's weekly average are seeing a lag of seven to ten days between the pump spike and the settlement adjustment.

The diesel crack spread hit a record $102 per barrel in August, signaling refinery margins at four to six times normal. That markup, combined with the supply losses Kloza described, means the current price environment is structural, not speculative. Small fleets should model fuel costs at current levels or higher through year-end and into Q1 2027.