The United States is producing record amounts of crude oil, with the Energy Information Administration (EIA) projecting an average of 13.8 million barrels per day in 2026. However, this surge in production hasn’t translated into relief for the diesel crisis, as prices have climbed to record highs and distillate inventories remain critically low. The EIA expects these inventories to stay below the five-year range through much of 2027, a situation not seen in over two decades.
The disconnect arises because crude oil and diesel are not directly interchangeable. Refining crude oil into diesel is a complex process constrained by chemistry, refinery configurations, and equipment. A typical barrel of crude yields about 19-20 gallons of gasoline and 11-13 gallons of ultra-low-sulfur distillate, which includes diesel. Refineries cannot simply double diesel production in response to price surges due to these inherent limitations.
U.S. refineries are already operating near full capacity, averaging around 96% utilization. This leaves little room for additional production, especially as maintenance schedules and global supply constraints tighten. Additionally, U.S. refining capacity has slightly decreased, with operable crude-distillation capacity dropping by about 250,000 barrels per day from 2025 to 2026.
The diesel shortage is also a global issue. Disruptions in Russia, the Middle East, and China have reduced supplies, forcing the U.S. to export more diesel to meet international demand. Europe, which has significantly reduced its refining capacity over the past decade, is particularly vulnerable, exacerbating the global tightness in diesel markets.
Despite calls to restrict diesel exports to lower domestic prices, such a move could have unintended consequences. Refineries optimize the entire barrel, and altering one product’s availability could impact the economics of others. Thus, high U.S. crude production coexists with elevated diesel prices due to the complexities of the global petroleum supply chain.