Why Is Diesel More Expensive Than Gas?
Diesel hit $6.49 a gallon this week against $4.47 for regular gasoline. A year ago it was $3.71. On January 6, 2026 the Energy Information Administration forecast that diesel would average $3.46 a gallon in the third quarter, on an assumption that Brent crude would average $55 a barrel. Brent settled at $103.87 on September 18 and EIA’s own weekly number came in at $6.285 on September 14 — the highest nominal price since the agency began publishing the series in 1994.
The forecast was not wrong about crude in a way that explains the gap. Crude is roughly half the retail price of diesel; the other half is the refining margin, and that is what moved. The Gulf Coast diesel crack spread hit $100 a barrel on August 17, the first time on record, against a normal range of $15 to $25. Ukraine struck Russian refineries at least 194 times in the first half of 2026 — eleven times the 2025 rate — and Russian throughput fell to 3.6 million barrels a day in July, the lowest since May 2002. Gulf refining took damage from the Iran war. Capacity shut during the pandemic never restarted, and two California refineries closed on their own: Phillips 66 Wilmington at 139,000 barrels a day and Valero Benicia at 145,000. U.S. distillate inventories are forecast below 100 million barrels this month, the lowest seasonal level since 1951, heading into the heating season.
The analytical question is not why the number was wrong. It is why the wrong variable was the one being modeled. Crude has a futures market, a daily settlement and an army of analysts. Global working refinery capacity has none of those things, and it is what set the price. Watch whether the distillate crack holds above $2 a gallon through November, as EIA now projects, and whether inventories rebuild before winter demand arrives.
Eric Garland is an intelligence analyst personally sanctioned by the Russian Federation in May 2022 for his work on Russian intelligence operations. He is the author of the 2016 “Game Theory” thread, named by The New York Times as one of the 25 most important tweets in history.
🔔 Subscribe for daily geopolitical intelligence analysis.
📝 Substack: ericgarland.substack.com
🎤 Book Eric to speak: Leading Authorities — https://www.leadingauthorities.com/speakers/eric-garland
SOURCES
U.S. Energy Information Administration, Short-Term Energy Outlook, January 6, 2026 — 2026 retail diesel forecast $3.50/gal; Q3 $3.46; Brent $55/bbl
U.S. Energy Information Administration, Short-Term Energy Outlook, September 2026 — 2026 diesel revised to $5.07; distillate crack revised up 20.8%; inventories below 100 million barrels
U.S. Energy Information Administration, “What goes into diesel prices?”, Today in Energy, September 18, 2026
U.S. Energy Information Administration, Weekly Retail On-Highway Diesel Prices, September 14, 2026
U.S. Energy Information Administration, Refinery Capacity Report — Phillips 66 Wilmington and Valero Benicia closures
AAA National Average Fuel Prices, September 19, 2026
RBN Energy, “The $100/bbl Diesel Crack, or How 2026 Exposed the Fragility of Global Refining,” August 2026
Financial Times, analysis with Rochan Consulting, June 5, 2026 — 194 strikes on Russian refineries, H1 2026
