Diesel Costs $5.60 Because Refiners Are Broken—Not Because Crude Is High

Crude oil is sitting in the $80s. On-road diesel is still above $5.60 a gallon. That gap is costing you money every week, and your freight contract is not designed to explain why.

The spread between what crude costs and what diesel costs is called the crack spread. Right now it's above $100 per barrel. Normal is $15–$25. That's not the market being jittery. That's the market broken at the refinery level.

"It's not necessarily a crude issue or a crude crisis," said Aaron Decker, partner and CEO of Multi-Service Fuel Card. "We're not in a crude crisis, we're in a refining crisis."

He's right. Between 7 and 8 million barrels per day of global refining capacity is currently offline, driven by Ukrainian drone strikes on Russian refineries and disruptions across the Middle East. U.S. refiners are already running at 96% utilization. The Department of Energy is pushing to squeeze more out of the system, but there is no meaningful slack left. When hurricane season takes a run at Gulf Coast infrastructure this fall, it hits a system with zero buffer.

The inventory picture is worse. U.S. total distillate inventories dropped 17% in the first half of 2025 — more than double the typical seasonal drawdown, per the EIA's Short-Term Energy Outlook. The EIA projects those inventories staying at multi-year lows through the end of 2026. This is not a Q3 problem you wait through.

While you're eating $5.60 diesel, the other side of that ledger is doing fine. Marathon Petroleum and Valero more than doubled their per-barrel refining margins in Q2 and collectively returned over $5 billion to shareholders in buybacks and dividends in a single quarter. That money came from somewhere.

Here's the practical problem: most broker fuel surcharge tables are indexed to crude prices or retail rack diesel, not to crack spreads. When the actual price driver is refining margin compression, a contract pegged to crude leaves the carrier eating the difference between those two numbers. Brokers know exactly how their surcharge tables are built. They are not rushing to fix the benchmark.

BofA analyst Francisco Blanch put it plainly: diesel markets "will stay tight and expensive well into next year." The government's own forecasters are saying the same thing for the next 18 months. "Wait and see" is not a hedge against that.

If your fuel surcharge clause is pegged to crude, you are negotiating against a number that has almost nothing to do with why diesel costs what it costs — and the people on the other side of that contract know it.