Diesel Prices: It’s a Refining Crisis, Not Crude

Diesel prices are still above $5, and Aaron Decker says the real problem is refining capacity — not crude oil.

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On-road diesel prices hit the high $5.60s this week, and the culprit is not crude oil — which has been hovering in the $80s — but a refining capacity crunch that has sent crack spreads above $100 per barrel, well beyond their typical $15–$25 range, said Aaron Decker, partner and chief executive officer of Multi-Service Fuel Card.

“It’s not necessarily a crude issue or a crude crisis,” Decker said. “We’re not in a crude crisis, we’re in a refining crisis.” Ultra-low distillate inventories have fallen to levels not seen since the early 2000s, and even the late 1990s, he added — a signal he called “really troubling.”

Several forces are compounding the supply squeeze. Ukrainian drone strikes have taken out Russian refineries that were previously helping backfill global shortfalls. U.S. Gulf Coast diesel exports are running elevated as domestic refiners supply shortage-stricken markets overseas, which simultaneously tightens American supply and consumes domestic refining capacity. Decker said a weekly government report tracking Hormuz tanker traffic, Russian refinery runs, and U.S. distillate inventories are the three indicators he watches most closely.

“I don’t anticipate this getting better in the very near future. I anticipate, and I think the EIA agrees with that, they adjusted their forecast from where they were at the beginning of the year to how things stand now. And I would imagine we’re north of $5 for the foreseeable future.” — Aaron Decker, CEO, Multi-Service Fuel Card

Decker traced the first major fuel-price shock to March 2022, when the Russia-Ukraine conflict erupted, and said geopolitical unrest continues to keep crack spreads elevated. Hurricane season adds another wildcard: he noted that El Niño activity could threaten Gulf Coast refining infrastructure in Q3 and Q4, potentially compounding an already tight market.

On the carrier side, Decker said fleets are leaving money on the table by taking a “set-it-and-forget-it” approach to fuel programs. When prices spike, fraud also surges, making adherence to fraud-protection protocols critical. He urged fleet managers to pull invoices and contact their fuel account managers to uncover savings. When asked what share of carriers are still paying full retail diesel prices, Decker estimated less than 10% — consistent with a figure of roughly 2% cited by a major fuel stop operator during the interview.

Multi-Service Fuel Card, founded in 1978 and credited as the first fuel card to offer real-time transaction authorization for over-the-road trucking, was acquired earlier this year by Decker and two partners — a deal the company announced in May. Decker has been associated with the business since 2012 and noted the company celebrated its 14th year of his involvement earlier this month.

• Diesel crack spreads have surged above $100/barrel, far exceeding the normal $15–$25 range, as Ukrainian drone strikes on Russian refineries and elevated U.S. Gulf Coast exports tighten global refining capacity.
• Ultra-low distillate inventories have dropped to levels last seen in the early 2000s or late 1990s, and Multi-Service Fuel Card CEO Aaron Decker expects diesel to remain above $5 for the foreseeable future.
• Fewer than 10% of carriers are estimated to be paying full retail diesel prices, meaning fuel surcharges tied to retail benchmarks may not reflect what most fleets actually pay.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.