Iran War's Impact: Record Diesel Price Surge in United States
Diesel fuel prices in the United States continue to set record highs, with the average gallon price reaching $6.28 on September 14, 2026. Estimates anticipate these elevated prices will persist in the near term, a situation where the American economy heavily relies on diesel for freight transport, agriculture, and construction. This fuel is also critical for heating, thus extending the impact of its price surge across multiple economic sectors, according to "theconversation". The inflation-adjusted diesel price in late August approached levels seen in 2022, as prices continued their ascent. This rise is linked to three primary factors: a decline in global diesel refining capacity, the repercussions of the Russia-Ukraine conflict, and the American conflict against Iran, which led to the closure of the Strait of Hormuz for over six months, impacting a significant portion of oil and refined product shipments. By mid-September 2026, diesel prices had increased by 67% compared to their national monthly average in September 2025, when they stood at $3.75 per gallon. Prior to the initial US-Israeli strike on Iran in late February, specifically in January 2026, the average price was $3.52 per gallon, indicating that diesel prices have surged by over 78% since the start of the conflict. Part of this increase is attributed to the continuous decline in the United States' and the world's capacity to refine diesel over several years, making it extremely difficult to increase production to compensate for the shortage. **Decline in Refinery Production Capacity** Since 2006, the United States has implemented federal regulations requiring refineries to produce diesel with significantly lower sulfur content than previous levels. The aim of these regulations was to reduce air pollution and causes of acid rain, particularly those originating from trucks and buses. These rules were expanded in 2014 to include locomotives and marine vessels. These regulations forced US refineries to install costly equipment, with implementation taking years and costing billions of dollars. They also increased the cost of fuel production by 5 to 9 cents per gallon. Low-sulfur fuel also contains slightly less energy per unit volume, necessitating the use of a greater quantity to meet demand. Over the past fifty years, only one refinery has been built in Galveston, Texas, with a production capacity of 45,000 barrels per day, which satisfies less than 0.2% of US demand. In 2025, two refineries closed due to poor economic performance. Since 2020, over 12 other refineries have converted to producing renewable diesel, taking advantage of federal and state incentives for biofuels, but this conversion can reduce the actual quantity of fuel produced by at least half. Consequently, the remaining refineries are operating near their maximum capacity. In late August, the amount of crude oil entering refineries was approximately 17.5 million barrels per day, with refineries operating at about 98% of their maximum capacity, the highest level since 2018. However, distillate production, which includes diesel, heating oil, and jet fuel, remained below its 2025 levels. Distillate inventories held by refineries, distributors, and retailers fell to approximately 103 million barrels by late August, the lowest for that period of the year since 1951.
