Diesel prices in California have reached a level at which some forecourt pumps can no longer display a higher figure, with stations showing the maximum possible price of $9.999 a gallon.
GasBuddy, the fuel-price tracking company, said the figure had been confirmed at pumps in Serra Mesa, a suburb of San Diego, on Wednesday as the state average climbed to $7.91 a gallon.
Patrick De Haan, GasBuddy’s head of petroleum analysis, said the company was checking reports from other locations. He cautioned, however, that a $9.999 display does not always mean fuel is being sold at that price, as some stations use it to indicate that their diesel supplies have run out.
Several California forecourts are nevertheless charging more than $9 a gallon, highlighting the severity of a worsening diesel supply crunch. The state’s prices are being driven higher as oil markets react to escalating military tensions in the Middle East and renewed disruption around the Strait of Hormuz.
California diesel prices hit the limit
The average US diesel price passed $6 a gallon this week for the first time, according to GasBuddy. Mr De Haan said it could rise to $7 nationally in the coming weeks, warning that there was little evidence of an improvement in market conditions.
“There are really no signs of any improvement,” he said. “There are more signs of escalation. We’re headed in the wrong direction.”
Mr De Haan said the first reports of pumps displaying $9.999 had given him “chills”, because the figure had previously seemed like a theoretical limit rather than a realistic price. He said it was not yet clear whether stations could legally alter their pump software to move the decimal point and charge more than $10 a gallon, or whether they might instead sell fuel in smaller quantities.
Brent crude, the global oil benchmark, rose by almost 8 per cent on September 10, moving from about $101 to $109 a barrel. US regular petrol averaged $4.27 a gallon on the same day, its highest September level on record, with further increases expected.
The pressure is particularly acute for diesel, which powers freight vehicles, farm machinery and much of the global supply chain. Unlike crude oil, fuel products such as diesel are not generally held in strategic reserves, leaving markets more exposed to interruptions in refining and transport.
Saudi Arabia’s oil production fell to 6.2 million barrels a day in August, its lowest level since 1990, according to Opec figures cited in the report. Disruption linked to Houthi attacks in the Red Sea, including attacks on Saudi oil infrastructure, has added to concerns about supply, while tankers have also come under threat near the Strait of Hormuz.
The timing is especially difficult for farmers, who depend heavily on diesel during the harvest season, which typically begins in September. Mr De Haan warned that higher transport and operating costs would feed into the wider economy in the weeks ahead.
He estimated that elevated petrol and diesel prices were already costing American consumers more than $700 million a day compared with last year, and said the daily impact could approach $1 billion. “Gasoline is painful,” he said, “but diesel is really going to be the troublesome child.”
Dan Pickering, founder of Pickering Energy Partners, said the focus on crude oil passing $100 a barrel risked obscuring the more immediate problem in the diesel market.
“The market is competing for a limited supply of diesel,” he said. “Prices are quite high and there’s no easy relief valve. Nobody is building new oil refineries.”
