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Weekly Energy Update · Week 34
Fuel & Energy Report
B Mello Ag Services · Central Valley, CA
Published Monday, August 17, 2026 • Week in Review: August 10–16 • Forecast: August 17–23
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♦ CA DIESEL $6.618 (▼10¢ WK) ♦ CA REGULAR $5.58 (▼4¢ WK) ♦ US DIESEL $5.257 ♦ WTI $82.40 (▲5% WK) ♦ BRENT $88.52 (▲6% WK) ♦ ▲ ULSD FUTURES +10% ♦ TANKERS HIT IN HORMUZ
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📈 This Week’s Call
Higher. We look for 6–20¢ back onto diesel and 4–14¢ onto gasoline by Friday. If you did not finish covering last week, cover now.
Last Monday we told you to finish booking harvest diesel into the break and be done with it. That window lasted five days. Iranian drones hit two Abu Dhabi tankers in the Strait on Thursday, Washington answered with an indefinite blockade and “economic isolation,” and the paper market went straight back up: WTI settled Friday at $82.40, up 5% on the week, Brent at $88.52, up nearly 6%. Diesel futures did worse — ULSD gained almost 10% in five sessions. Meanwhile the pump was still printing last week’s crude break: California diesel came in at $6.618 and regular at $5.58. That gap does not stay open. The rack has already moved. Retail follows it in seven to fourteen days.
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Section 1
Last Week at the Pump
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Retail finally delivered the decline we were promised — a week late. EIA’s survey for the week ending Monday, August 10 put California diesel at $6.618, down about 10 cents, and California regular at $5.428, with the national gasoline average dropping 7.3 cents to $4.006. AAA’s Friday, August 14 read had California regular at $5.58, off 4 cents. Every one of those numbers reflects crude that was trading in the seventies. Crude is not trading in the seventies anymore.
| CA Diesel |
| $6.618 |
| statewide · EIA wk 8/10 |
| ↓ 10¢ wk · $1.36 over the U.S. average. |
| CA Regular |
| $5.58 |
| statewide avg · AAA 8/14 |
| ↓ 4¢ wk · still the priciest state in the country. |
| WTI Crude |
| $82.40 |
| Sept. contract · Fri 8/14 |
| ↑ 5% wk · Wednesday settle was $83.27. |
| Brent Crude |
| $88.52 |
| ICE front month · Fri 8/14 |
| ↑ 6% wk · gave back nearly all of the prior week’s drop. |
Central Valley & Reference Markets — Regular Unleaded
| Market |
Regular |
Wk |
Note |
| Stockton |
$5.37 |
▼ 7¢ |
Cheapest market in the state this week and 21¢ under the California average. AAA, August 14. |
| Modesto |
$5.38 |
▼ 4¢ |
Held its discount. 20¢ under the state average. AAA, August 14. |
| Fresno |
$5.49 |
▼ 5¢ |
Valley hub. Watch this one first as harvest trucking bids into the rack. AAA, August 14. |
| Sacramento |
$5.49 |
▼ 6¢ |
North Valley reference point, now level with Fresno. AAA, August 14. |
| San Francisco |
$5.70 |
▼ 6¢ |
Still the priciest metro — a 33¢ premium over Stockton. AAA, August 14. |
| California avg. |
$5.58 |
▼ 4¢ |
AAA, August 14. EIA’s week-ending 8/10 survey printed $5.428. Los Angeles came in at $5.424, up $1.24 from a year ago. |
| U.S. avg. |
$4.07 |
▲ up |
Dipped to $4.00 Monday, then turned back up. AAA calls this the highest August national average on record. The turn is already underway nationally. |
Diesel detail: EIA’s survey for the week ending August 10 put California on-highway diesel at $6.618, down roughly 10 cents, against a national average of $5.257. That is a $1.36 California premium. West Coast less California printed $5.526, so we are paying about $1.09 over our own neighbors for the same gallon. Off-road dyed diesel is exempt from California’s 48.2¢ state excise and the 24.4¢ federal excise — roughly a 73¢ per gallon spread before sales tax. Price your rack and cardlock against these numbers, not the sign on the highway.
For your surcharge tables: the DOE national on-highway diesel average of $5.257 for the week of August 10 is the figure that governs fuel surcharges effective August 12 through August 18. It is the last low print you are likely to see for a while — make sure your haulers actually applied it.
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Section 2
The Week Ahead: Our Forecast
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For the week of August 17 through 23. September ULSD closed Friday at $4.2829 a gallon after gaining almost 10% in five sessions. September RBOB closed at $3.1841, up about 7%. Those are wholesale numbers, and they are already in the rack. Retail is the last thing to move — and it moves up faster than it moves down.
| Fuel |
Expected Range |
Direction |
| CA On-Highway Diesel |
$6.68 – $6.82 |
▲ Higher — 6 to 20¢ on. ULSD futures did 10% in a week; this is the pass-through. |
| CA Regular Gasoline |
$5.62 – $5.72 |
▲ Higher — 4 to 14¢ on, softened by summer driving demand rolling over. |
| Central Valley Retail |
9 to 21¢ under state avg. |
▲ Follows the statewide move. The Valley leads down and lags up — use that. |
| Crude (WTI) |
$78 – $88 |
◄ Two-way, biased up — record inventories against live shooting in the Strait. |
▲ Pushing Prices Up |
They are shooting at tankers again. The UAE says Iranian drones struck two ADNOC vessels transiting Hormuz on Thursday. Both took damage. That is not a negotiating position, that is a physical risk to the corridor.
Washington hardened, not softened. Treasury is promising unprecedented economic isolation of Iran and Defense says the naval blockade can run indefinitely. The diplomatic path we were watching two weeks ago is closed.
Russia lost an export terminal. Novorossiysk halted crude loadings Friday after a Ukrainian drone strike on Sheskharis. Barrels off the water anywhere show up in our rack eventually.
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▼ Holding Prices Down |
A 17.4 million barrel build. U.S. commercial crude stocks jumped to 424.4 million barrels, the biggest inventory position in about three years and only 2% under the five-year average. Two weeks ago we were 6% under.
OPEC and the IEA both cut demand. When the producer cartel and the consumer agency downgrade the same year in the same week, that is a real signal about 2027 barrels.
Gasoline demand is rolling over. Down to 8.96 million barrels a day from 9.03 million. Labor Day is the last holiday pull of the season.
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Our read: Last Monday we called the break a gift with a short shelf life and told you to finish covering into it. Five days later the gift was gone. Here is the thing we want you to take away: the bearish case is entirely about barrels in tanks, and the bullish case is about barrels that cannot move. A 17.4 million barrel build is genuinely heavy — and it did not stop diesel futures from adding 10% in a week, because inventory in Cushing does not help a cargo that will not sail through Hormuz. Diesel is the tight one. It always is when a shipping lane closes, because distillate is what moves on ships. If you are still uncovered on harvest diesel, cover it this week and stop trying to time it. What would invalidate this call: a genuine de-escalation, an Iranian stand-down on tanker traffic, or a second consecutive build of this size with no new incidents — any of which puts WTI back in the seventies and the pump back where it was Friday. We do not think you get paid enough for waiting on that.
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Section 3
Your Other Energy Costs
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Diesel gets the headlines, but with harvest heat running triple digits across the southern San Joaquin, the pump motor is the bigger line item on most Valley operations right now. Here is where the rest of your energy stack sits this week.
| Input |
Where It Is |
What It Means for You |
Electricity
(pump power) |
~35¢/kWh
CA average |
We are in the hottest stretch of PG&E’s summer season, which runs June through September with the peak window at 5–8 p.m. daily, holidays included. PG&E’s next General Rate Case remains pending at the CPUC and ag groups — the Western Tree Nut Association among the loudest — are actively contesting the agricultural class allocation. Nothing changes your bill this week. Budget for the climb, not the press release. |
Natural Gas
(Henry Hub) |
Low
$2.73/MMBtu |
Gas closed August 14 at $2.73 and has held a $2.75–$2.80 band all week. Storage sat 6.6% above the five-year average for the week ending August 7 and Lower 48 production is running a record 111.2 Bcf a day in August, up from 110.7 in July. Heat is pulling on power burn, but supply is beating it. This is still the one input on the page that is not going against you — good news for gas-fired pumps, dryers and dehydrators. |
| Propane |
Seasonal low
66¢/gal wholesale |
Mont Belvieu spot printed 66.4¢ on August 7, the most recent day in EIA’s published daily series, after trading a 65–67¢ band all week. U.S. propane inventories are running about 31% above the five-year average. EIA’s residential survey stays on its April–September pause and resumes October 7. August and September are the historical annual trough. This is the window to book fall and winter propane for frost protection, heaters and dryers — and it is closing. |
LCFS &
Cap-and-Invest |
Firm
mid-$60s/ton |
LCFS credits have held the mid-$60s a ton against a first-quarter 2026 average near $63, with December futures on ICE trading as high as $72. The 2024 amendments tightened credit supply and deficits now exceed credits. Diesel generates more deficits per gallon than gasoline, so this is a structural add to your fuel cost that does not fall when crude falls. The next cap-and-invest allowance auction is Wednesday, August 19; the 2026 price ceiling is set at $102.52 an allowance. |
EV / Fleet
Charging |
47¢/kWh
CA public avg |
Unchanged again on the week against a 42-cent national average, with California fourth most expensive in the country. On-site charging on an ag time-of-use schedule still beats public DC fast charging by a wide margin. |
What the 5–8 p.m. block actually costs you. A 100-horsepower pump draws roughly 83 kW at the meter once you account for motor losses. Run it straight through the three-hour peak window and that is 249 kWh a day landing in the most expensive block on your tariff. If your peak-to-off-peak energy spread is 15 cents a kilowatt-hour — pull your own schedule and check, because it varies — you are paying about $37 a day per pump for the privilege, or roughly $1,120 a month. Five pumps, and that is $5,600 a month in timing alone. Shifting that load to night hours is still the cheapest energy savings available to you, and it costs nothing but a controller setting.
And the lift itself: at 35 cents a kilowatt-hour, moving one acre-foot from 300 feet at 60% plant efficiency runs about 512 kWh, or $179 per acre-foot — roughly $627 an acre on a mature almond block taking 3.5 acre-feet. Let that pump slip to 45% efficiency and it becomes $239 per acre-foot, or $835 an acre. That $208-an-acre penalty is the single biggest number on this page, and it is one you control.
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Section 4
News Behind the Numbers
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Global · Highest Impact
Drones Hit Two Tankers and the Diplomacy Died
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The United Arab Emirates accused Iranian forces of launching drone strikes Thursday against two Abu Dhabi National Oil Company tankers transiting the Strait of Hormuz, calling it piracy. Both vessels took minor damage; no casualties. Washington answered hard — Treasury Secretary Bessent promised unprecedented economic isolation measures against Iran and Defense Secretary Hegseth said U.S. forces can hold the blockade of Iranian ports indefinitely. Tehran says the waterway stays closed. Shipping volume through the Strait has fallen below its monthly average. That corridor historically carried about 20% of the world’s oil and LNG. Two weeks ago we were pricing a shipping deal. This week we are pricing shots fired. Brent added nearly 6% and diesel futures added almost 10%.
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Fundamentals · The Other Side
A 17.4 Million Barrel Build That Did Not Matter
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U.S. commercial crude inventories surged 17.4 million barrels to 424.4 million — the heaviest position in roughly three years and now only about 2% under the five-year average, against 6% under just two weeks ago. Both OPEC and the IEA cut their 2026 demand growth forecasts in the same week. Gasoline demand slipped to 8.96 million barrels a day and total gasoline supply eased to 208.7 million barrels. On any normal week that combination takes five dollars out of crude. It did not, and the reason is worth understanding: crude in a Gulf Coast tank is not the same product as a distillate cargo that cannot leave the Persian Gulf. The market is not short barrels. It is short delivery. That is why diesel — your fuel — ran twice as hard as crude did.
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California · The Floor Under Everything
Highest August National Average On Record — and We Are $1.51 Over It
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AAA called it plainly: this is the highest August on record for the national gasoline average. The national number dipped to $4.00 Monday and turned right back up to $4.07. California sat at $5.58 — a $1.51 premium, and the most expensive state in the country for the week. The structural reason has not changed and will not: Phillips 66 closed its Los Angeles-area refinery in late 2025 and Valero stopped making gasoline at Benicia in April, together roughly 17% of California’s gasoline supply, with Valero now importing into Northern California instead. Add the July 1 excise step to 63.4¢ on gasoline and 48.2¢ on diesel, LCFS credits in the mid-$60s, and cap-and-invest allowances. UC Davis economists put the refinery capacity loss alone at roughly $1.21 a gallon once fully realized. None of that comes off when crude comes off.
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Central Valley · Harvest Now
An Early, Compressed Harvest Meets a Rising Diesel Market
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Blue Diamond’s August 13 crop progress report confirms what most of you already know from the seat of a shaker: this harvest started early and it is running fast. First shakers went into western Colusa County July 10, west-side blocks followed the week of July 12, first deliveries hit huller/shellers the week of July 19, and Highway 99 corridor blocks began the first week of August. Hulls splitting across pollinator varieties point to a compressed harvest — more gallons burned in fewer days — while thick hulls may slow huller flow rates and stretch drying and processing hours. Meanwhile the southern San Joaquin ran 102 to 105 degrees at the end of July with more heat into August, which is irrigation demand and shaker hours in the same breath. The arithmetic that matters: a 400-mile round-trip haul at 6 mpg burns about 67 gallons, or $441 at Monday’s $6.618. Every dime diesel adds is $6.70 more per load and $1,000 more per 10,000 gallons of harvest fuel. We are calling for six to twenty cents of that this week — call it $4 to $13 a load and $600 to $2,000 on ten thousand gallons.
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Section 5
What To Do This Week
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✓ Action Items
| 1. If you are uncovered on harvest diesel, cover it Monday. Book through October and stop timing it. ULSD futures moved 10% in five sessions and the rack has already followed. Waiting for a retest of last week’s low means betting against live tanker strikes. |
| 2. Book fall propane this week — last call. Mont Belvieu at 66 cents with inventories 31% above the five-year average is as good as this gets. Frost protection, dryers and heaters all price off this window and it closes in September. |
| 3. Lock your hauler’s surcharge basis in writing. The DOE figure governing August 12–18 is $5.257. It is going up from here. Make sure your contracts reference the published weekly number and not a hauler’s estimate of it. |
| 4. Pull irrigation out of 5–8 p.m. before the next heat run. Roughly $1,120 a month per 100-HP pump on a 15-cent peak spread. It is a controller setting, not a capital project, and harvest heat is when it pays most. |
| 5. Plan the pump test for the post-harvest window now. Worth about $208 an acre on a 300-foot lift. The clean pre-harvest window has closed — get on a tester’s calendar for October before everyone else does. |
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👀 What We’re Watching Next Week
Tuesday, Aug. 18: EIA weekly retail price survey — the first official print to capture last week’s rebound. This is where our call gets graded. Wednesday, Aug. 19: EIA weekly petroleum status report; a second build of any size would be the first real argument against the bulls. Wednesday, Aug. 19: California cap-and-invest allowance auction — another sold-out sale keeps that cost embedded in your gallon. Thursday, Aug. 20: EIA natural gas storage report. Ongoing: tanker traffic and further strikes in the Strait, and whether Novorossiysk gets its loadings back. Local: huller/sheller flow rates on thick hulls, and evening pump load through the next heat run.
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Let’s Build Your Energy Plan
Fuel, pumping power and input costs all run through the same budget. We can walk your operation, look at your rate schedule and pump efficiency, and time your buys around what the market is actually doing. Reach out any time.
Fuel Buying Strategy
Pumping Cost Review
Custom Blends
Soil & Water Analysis
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We watch the world markets so you can stay focused on the ground under your boots. Every Monday morning, you’ll know what fuel and power did last week — and what we think they’ll do next.
Proudly American · Rooted in the American Dream
Bryan Mello
B Mello Ag Services — Central Valley, California
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B Mello Ag Services · Central Valley, CA
Weekly Energy Update · Week 34 · Published Monday, August 17, 2026
(559) 816-3889 · bryan@bmelloag.com
This Weekly Energy Update is provided for informational and educational purposes only. Fuel, power and commodity prices are sourced from publicly available market and industry reports as of the publication date and are subject to rapid change; figures are approximate and forward-looking statements reflect our current market view, not a guarantee. Retail averages will differ from your rack, cardlock or contract pricing. This publication does not constitute financial, legal, or agronomic advice. Always consult a licensed commodity broker before making marketing or hedging decisions and a licensed PCA/CCA before making agronomic decisions. B Mello Ag Services assumes no liability for decisions made based on information in this publication.
Data sources: U.S. Energy Information Administration weekly retail gasoline and diesel price survey (week ending August 10, 2026, released August 11) and weekly petroleum status report; AAA Fuel Price Report and AAA Mountain West Group release (August 14, 2026); DTN Oil Update and market coverage of the August 10–14 crude, ULSD and RBOB sessions, the Strait of Hormuz tanker strikes and the Novorossiysk terminal halt; EIA Mont Belvieu propane daily spot series (August 3–7, 2026) and weekly propane inventory data; Henry Hub natural gas quotations (August 14, 2026) and EIA weekly natural gas storage report (week ending August 7, 2026); Argus Media and ICE LCFS credit assessments; California Air Resources Board cap-and-invest auction calendar and 2026 price ceiling; California Department of Tax and Fee Administration excise tax rates effective July 1, 2026; CPUC PG&E General Rate Case proceedings and PG&E agricultural tariff schedules; UC Davis College of Agricultural and Environmental Sciences analysis of California refinery closures; and Blue Diamond Growers Crop Progress Report, August 13, 2026.
Cell: (559) 816-3889
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