Gas is nearly $4 again—here's why it's not just oil
US drivers are watching gas climb toward $4 a gallon again, while diesel just topped $5—but the spike is not only about crude. Refinery damage, exports of U.S. fuel abroad, and thin inventories are pushing pump prices faster than oil itself, according to AAA and industry analysts.
Key Takeaways
- Average U.S. gas rose 15 cents in a week to $3.94 a gallon and is heading toward $4, AAA data show.
- Diesel topped $5 a gallon again—about $5.05—for the first time in three weeks.
- Oil is up roughly 16% since the Iran war began, while gas and diesel have risen more than 32%.
- Damaged refineries abroad and record U.S. fuel exports are tightening supply even as summer demand rises.
- Higher diesel costs can feed into groceries, deliveries, and other shipped goods.
After a brief pause, pump prices are climbing again amid renewed fighting linked to Iran and the Strait of Hormuz. Yet CNN Business reports that gas and diesel have “taken on a life of their own,” moving well beyond what oil alone would suggest. For more on how markets and technology reshape daily costs, see Future Tech & AI Wonders.
Why are gas and diesel rising faster than oil?
Crude makes up most of gasoline’s cost, and oil jumped above $85 a barrel after a U.S.–Iran memorandum of understanding collapsed. Still, since the war started, oil is up about 16% while gas and diesel have both risen more than 32%—roughly double oil’s gains.
Refineries cannot instantly turn newly freed crude into fuel. Iran damaged or destroyed 30 Middle Eastern refineries, and about 2.1 million barrels of refining capacity remain offline, JPMorgan’s Natasha Kaneva told CNN. Meanwhile, Ukraine drone strikes have hit so many Russian plants that Russia—once a major diesel exporter—has become a net importer, tightening global diesel supply.
What is driving America’s pump-price squeeze?
U.S. refineries ran near full tilt—about 96% of capacity last month—and processed their largest second-quarter crude volume since 2019. A record share of American jet fuel and diesel is shipping overseas to fill global gaps, CNN reports.
That flow has left U.S. gasoline inventories at their lowest since 2012: roughly 210 million barrels, only about 20 million above critical levels, according to Andy Lipow of Lipow Oil Associates. Summer travel demand is rising just as diesel use is set to peak with the fall harvest—low stockpiles meet high demand.
Crack spreads, the margins refiners earn, have hit extremes: gasoline spreads are up 60% from a year ago, and diesel and jet fuel spreads are more than double 2025 levels, per the U.S. Energy Information Administration.
How could $5 diesel hit what you buy?
ABC News notes the average diesel price at $5.05, up about 4% in a week. Diesel powers trucks, trains, and ships, so higher costs can ripple into groceries, home deliveries, and moving services, economists told ABC.
Every dollar of food typically includes only a few cents of transport, but perishables such as fruits and vegetables are more exposed. Analysts say an easing in the Strait of Hormuz could cool prices again—making geopolitics the biggest wild card for both gas and diesel.