When Randy Madden saw the way diesel prices were rising, he decided to delay purchasing the fuel that powers his 3,000-acre farm in Iowa.
Except prices are at around the same level as when he made that decision in May.
Now, going into harvest season, he expects to spend more than $40,000 on fuel — roughly double what he typically pays from late summer through the end of the year.
“The volatility and the price is coming at a very bad time,” he said.
The average price of diesel in the United States was $5.62 a gallon on Wednesday, 53 percent higher than a year earlier, according to the AAA motor club. Because fuel supplies were disrupted after the United States and Israel went to war with Iran, diesel prices are now hovering close to a record high and could drive up prices of many other goods and services.
Diesel powers a vast chunk of America’s economy. It fuels equipment on farms like Mr. Madden’s, as well as trains, trucks and other heavy machinery. As prices climb, businesses often have to pass on that higher cost to their customers.
“Gasoline is mostly a consumer fuel, used for driving, whereas I would characterize diesel as the workhorse fuel used mostly by the corporate sector and small businesses,” said Daan Struyven, a Goldman Sachs commodities analyst.
The last time U.S. diesel prices rocketed up was in 2022 after Russia invaded of Ukraine, hitting a peak of $5.82 a gallon.
This is a global crunch.
To understand why diesel prices are rising, it’s important to understand the big picture. There is simply not enough diesel available to meet the world’s needs.
Refineries produce diesel, gasoline, jet fuel and other fuels by “cracking,” or heating, crude oil. The United States and China have most of the world’s refining capacity, followed by countries like Russia and India.
But Russia’s ability to make diesel has been severely hamstrung because Ukraine has damaged many of its refineries. In July, Bank of America analysts said Russian refineries were processing around 3.9 million barrels per day, down from 5.3 million barrels a year ago. That has forced Russia to suspend diesel exports.
“We estimate that now 40 percent of Russian refining capacity has been impacted by drone strikes,” said Debnil Chowdhury, who tracks the refining business for S&P Global. “And the reason that that’s important is it’s a global market.”
The effective closure of the Strait of Hormuz, the narrow waterway through which about a fifth of the world’s crude oil is shipped, has also limited the flow of crude oil, diesel and other petroleum products. As a result, the global oil price has climbed around 20 percent, to about $86 a barrel.
The volume of crude oil refined in the Middle East has dropped to about eight million barrels a day in 2026, down 1.6 million barrels a day from 2025 levels, S&P Global analysts said in an Aug. 1 report.
U.S. refineries have made up for some of that shortfall by operating at around 97 percent of their capacity, according to the Energy Information Administration. Exports of diesel and related fuels are up by around 28 percent compared with last year and U.S. inventories of those fuels have fallen sharply.
Higher prices benefit refineries but hurt buyers.
There’s one clear winner from higher diesel prices: refineries that are still able to sell fuel.
When oil is trading at a modest $70 a barrel, refineries typically earn $20 to $30 a barrel on the diesel they sell, Mr. Struyven of Goldman Sachs said. Now, U.S. refineries are earning close to $90 for every barrel of diesel.
In earnings reports for the second quarter, firms like Valero Energy and Marathon Petroleum said their profit margins on turning a barrel of crude into fuels have roughly doubled from a year earlier.
But users like framers and truckers are hurting.
Farmers need operating loans every year to cover the cost of equipment repairs, seed, fertilizer and fuel.
John Boyd, a founder of the National Black Farmers Association, said many farmers did not budget for bigger expenses when taking out their loans. Higher costs for fuel and other items have strained budgets and driven some farmers he knows to the brink of losing their properties.
“These are generational farmers going under,” said Mr. Boyd, who lives in Boydton, Va.
The trucking industry has also been affected. Large logistics companies are typically able to pass on all or most of their higher fuel costs to customers but smaller operators or drivers who operate independently may not be able to do so.
“It really just eats into your operations because you basically break it out into what is my cost per mile traveled,” said Zach Miller, vice president of government affairs at the Trucking Association of New York. “What’s left over is your profit margin.”
Producing more diesel won’t be easy.
The last U.S. refinery was built in 1977, in Louisiana, according to the Energy Information Administration. Since then, the industry has mostly invested in existing refineries rather than building new ones.
Building these hulking industrial facilities takes years and costs billions of dollars. Because refineries are built to operate for many decades, investors want to know that demand for fossil fuels will remain strong for a long time. But nobody can predict demand over the next couple of decades with any certainty given the rise of electric vehicles, including trucks.
Even if no new refineries are built, the supply of diesel could increase if China decided to export more fuel, Mr. Struyven said. But Chinese policymakers have placed restrictions on its refineries since the war began to make sure the country has enough fuel to meet domestic demand.
While refining capacity growth has slowed in most countries, most of the new growth is now coming from developing countries like India where a new refinery started in July, Mr. Struyven said.
In Nigeria, a major oil producer, the Dangote Petroleum Refinery has recently increased its crude processing capacity by 25 percent and plans to double its refinery’s total capacity by 2028. It’s helped push seaborne petroleum shipments from the country to 350,000 barrels a day in the second quarter of 2026, a jump from an annual average of 46,000 barrels a day in 2023, according to the Energy Information Administration.
