Diesel Fuel Crisis Begins & It’s Only Going To Get Worse

Texas declared a statewide disaster over diesel on September 28, and asked the EPA to waive the ultra-low sulfur standard. That is the alarm nobody reported. US distillate inventories were about 105 million barrels at the end of September, 13% below the five-year norm, and East Coast stocks were 31% below. They fell under the entire five-year range in April, and the EIA's own forecast keeps them below the five-year low through the end of 2026. That is the cushion the country is carrying into harvest, holiday freight and heating season at once. The capacity to refill it is gone. US refining capacity fell more than 250,000 barrels a day last year to 18.2 million, after a 263,776 b/d Houston refinery closed in March and a 138,700 b/d Los Angeles refinery closed in October, with another California plant following in April. No major new refinery has been built in this country in roughly 50 years, and a closed refinery does not reopen. Globally it is worse. The IEA estimates a Russian refinery was hit by a drone once every three days in the first eight months of 2026. Three of Russia's six largest diesel refineries are shut or at a quarter of capacity. Russian diesel exports fell below 1 million tons in June against 2.5 million a year earlier, and global seaborne diesel exports are down about 10%. On-highway diesel set an all-time record above $6.50 a gallon. Texas is at $5.86, up from $3.30 in February.