Diesel Prices Soar as Gold Falls After Fed Hike
The price of US retail diesel set a record of $6.31 on September 16 and matched it again on Friday, up 68% from a year ago and from about $3.76 before the war.
The difference between crude oil prices and diesel is attributed to the crack spread, which sits above $100 against a normal $20 to $40, indicating a refining shortage rather than a crude shortage.
This shortage is due to various supply shocks including the Russia-Ukraine War, which has taken Middle Eastern product exports off the market, disabled about a quarter of Russia's refining capacity, and collapsed its diesel exports from over 800,000 barrels a day to about 50,000.
The Fed raised interest rates by 25 basis points, but according to the dot plot, the median federal funds rate for the end of 2027 is 4.1%, the same as the end of 2026, and inflation is projected to return to 2% in 2029.