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Weekly Energy Update · Week 35

Fuel & Energy Report

B Mello Ag Services · Central Valley, CA

Published Monday, August 24, 2026 • Week in Review: August 17–23 • Forecast: August 24–30

♦ CA DIESEL $7.142 (▲20¢ WK) ♦ CA REGULAR $5.611 (▲4¢ WK) ♦ US DIESEL $5.454 ♦ WTI $86.83 (▲5% WK) ♦ BRENT $94.03 (▲6% WK) ♦ ▲ ULSD CRACK $102.86, ALL-TIME RECORD ♦ CEASEFIRE EXPIRED

All Fuel Reports

📈 This Week’s Call

Diesel higher again, we look for another 6 to 24¢ by Friday. Gasoline barely moves. Stop treating them as one market.

We called for 6 to 20 cents onto diesel last Monday. It did 20 cents statewide and as much as 28 in Hanford and Madera. California diesel closed the week at $7.142, up $2.02 from a year ago. Gasoline went the other way, up less than four cents to $5.611, and that split is the whole story. On Tuesday the ULSD crack spread, the refining margin between a barrel of crude and a barrel of diesel, settled at $102.86. That is the first triple-digit print in the history of the contract; the old record was $86.82 in October 2022, and before this war started it was $42.01. Crude is only up about 10% since February. Diesel is up more than 40%. You are not paying for a crude shortage. You are paying for a refining and shipping shortage, and there is nothing on the calendar that fixes it this week.

⛽

Section 1

Last Week at the Pump

Two different markets moved in two different directions. EIA’s survey for the week ending Monday, August 17 put California on-highway diesel at $6.785, up 16.7 cents, while California regular actually fell 3.1 cents to $5.397. AAA’s Sunday, August 23 read is fresher and worse: California diesel $7.142, up 20.2 cents on the week, against regular at $5.611, up less than four. Diesel is now $2.02 a gallon above where it sat a year ago. Regular is up $1.07. If you burn diesel for a living, this was not an average week.

CA Diesel

$7.142

statewide · AAA 8/23

↑ 20¢ wk · up $2.02 from a year ago.

CA Regular

$5.611

statewide avg · AAA 8/23

↑ 4¢ wk · barely moved while diesel ran.

WTI Crude

$86.83

front month · Fri 8/21

↑ $4.43 wk · second straight weekly gain.

ULSD Crack

$102.86

per bbl · settle Tue 8/18

All-time record · old high $86.82, Oct 2022.

Central Valley & Reference Markets, On-Highway Diesel

Market

Diesel

Note, and where regular sits

Hanford–Corcoran

$6.967

▲ 28¢

Cheapest diesel in the Valley but it took the biggest one-week hit in the state. Regular $5.486. AAA, August 23.

Modesto

$6.968

▲ 23¢

17¢ under the state diesel average. Regular $5.410, still the cheapest gasoline in the Valley. AAA, August 23.

Stockton–Lodi

$6.989

▲ 24¢

North Valley hauling reference. Regular $5.412. AAA, August 23.

Bakersfield

$7.002

▲ 17¢

Smallest diesel move in the southern Valley. Regular $5.647, actually flat on the week. AAA, August 23.

Visalia–Tulare

$7.011

▲ 25¢

Regular $5.502. AAA, August 23.

Madera

$7.027

▲ 28¢

Tied with Hanford for the sharpest weekly jump. Regular $5.591. AAA, August 23.

Sacramento

$7.032

▲ 23¢

Regular $5.529. AAA, August 23.

Fresno

$7.052

▲ 25¢

Valley hub. Watch this one first as harvest trucking bids into the rack. Regular $5.544. AAA, August 23.

Merced

$7.162

▲ 13¢

Most expensive diesel in the Valley and the only one above the state average. It moved least this week because it moved first. Regular $5.497. AAA, August 23.

California avg.

$7.142

▲ 20¢

AAA, August 23. EIA’s week-ending 8/17 survey printed $6.785, up 16.7¢. Regular $5.611. Diesel is up 36¢ in a month.

U.S. avg.

$5.454

▲ 20¢

EIA, week ending 8/17. This is the DOE figure your hauler’s surcharge runs off. National regular $4.099. AAA, August 23.

Diesel detail: EIA’s survey for the week ending August 17 put California on-highway diesel at $6.785, up 16.7 cents, against a national average of $5.454. That is a $1.33 California premium. West Coast less California printed $5.699, so we are paying about $1.09 over our own neighbors for the same gallon, the same gap as last week, which tells you this move is national, not a California refinery problem. 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 $5.454 for the week of August 17 is the figure that governs fuel surcharges effective August 19 through August 25. That is 19.7 cents higher than the week before. If you are the one paying the surcharge, expect it. If you are the one billing it, make sure it went out.

🔮

Section 2

The Week Ahead: Our Forecast

For the week of August 24 through 30. September ULSD settled Friday at $4.4770 a gallon, up about 19 cents on the week and holding right at the highs. September RBOB settled at $3.3322, up roughly 15 cents. Wholesale diesel has not backed off, retail has only partly caught up, and Treasury details a new Iran sanctions package Monday morning. We do not see a reason for diesel to fall this week.

Fuel

Expected Range

Direction

CA On-Highway Diesel

$7.20 – $7.38

▲ Higher, another 6 to 24¢ on. Record crack, futures at the highs, retail still catching up.

CA Regular Gasoline

$5.62 – $5.74

▲ Modestly higher, 1 to 13¢. RBOB added 7¢ Friday alone, but stocks built and Labor Day is the last pull.

EIA Print, Tue 8/25

CA diesel $6.90 – $7.05

▲ Higher, EIA’s survey runs roughly 15¢ under AAA and lags it by a few days. This is where our call gets graded.

Central Valley Retail

Diesel 9 to 18¢ under state avg.

▲ Follows, and the Valley discount is shrinking on diesel. Harvest hauling demand is bidding into the same racks.

Crude (WTI)

$84 – $92

◄ Two-way, biased up, crude stocks are at the five-year average, but the sanctions headline lands Monday.

▲ Pushing Prices Up

The ceasefire expired and nobody renewed it. The 60-day window ran out Monday, August 17. Both Washington and Tehran ruled out extending it. Iran has since stepped up attacks on ships transiting outside Tehran-approved corridors.

Hormuz traffic is in the single digits. Daily crossings have fallen to fewer than ten, against a pre-war average of 130 a day. Whatever anyone says about the strait being open, the ships are not sailing.

A third of Russian refining is offline. Ukrainian strikes have knocked out 20 to 40% of Russia’s refining capacity, triggering export bans there. Every refinery down anywhere tightens the same global diesel pool you buy from.

▼ Holding Prices Down

Crude built again. U.S. commercial crude stocks rose 4.4 million barrels to 428.8 million for the week ending August 14, now sitting right at the five-year average. On crude alone there is no shortage.

Refineries are running flat out. Utilization hit 97.2% of operable capacity, with crude inputs up 215,000 barrels a day. Refiners are chasing that record margin as hard as they can, and that eventually caps it.

Gasoline is comfortable. Motor gasoline stocks built 0.7 million barrels and gasoline production rose to 9.7 million barrels a day. This is why the pump split, gasoline has no problem right now.

Our read: Stop watching crude. It is telling you the wrong story. Crude stocks are at the five-year average and crude is up about 10% since this war started, but distillate stocks are 13% below the five-year average and fell another 1.5 million barrels last week, and diesel is up more than 40%. That divergence is the entire trade. A refinery running at 97.2% cannot make more diesel out of thin air when the middle distillate that used to come out of the Persian Gulf, nearly 4 million barrels a day of it, is not sailing. We look for diesel higher again this week and we would not wait for a pullback to book harvest gallons. The one genuine bear case is that record margin: at $102 a barrel every refiner on earth is maximizing distillate yield, and margins that wide historically do not last. But that correction takes months, not days, and you are hauling nuts in the next six weeks. What would invalidate this call: a real ceasefire with Hormuz reopening, the ULSD crack mean-reverting under $80, or a surprise distillate build in Wednesday’s report. Watch the distillate line, not the crude headline.

⚡

Section 3

Your Other Energy Costs

Diesel took the headline, but above-normal temperatures are forecast across the Valley through September 4, which means the pump motor keeps running and the power bill keeps climbing right alongside it. One item on this list also stopped being cheap this week. Read the propane row carefully.

Input

Where It Is

What It Means for You

Electricity
(pump power)

~35¢/kWh
CA average

Still inside PG&E’s summer season, June through September, with the peak window at 5–8 p.m. daily, holidays included. PG&E’s 2027 General Rate Case is pending at the CPUC, the utility asked for $16.6 billion in revenue, up $1.24 billion or 8% over 2026 levels, and the Commission is holding public participation forums on it. Nothing changes your bill this week. But that is the number to plan your 2027 pumping budget against.

Natural Gas
(Henry Hub)

Low
$2.77/MMBtu

Gas settled Friday, August 21 at $2.77, a second straight weekly gain on forecasts for above-normal heat through September 4. Lower 48 production is averaging a record 111.5 Bcf a day in August, above July’s record 110.7, and EIA expects storage to finish October at a record 3,985 Bcf, 5% above the five-year average. Supply is still beating demand. This remains the one input on this page that is not going against you, good for gas-fired pumps, dryers and dehydrators.

Propane

Turning up
~75¢/gal wholesale

This is the change on the page. Propane traded around 75¢ on August 21, against roughly 66¢ in early August, call it a 14% move in about two weeks. Inventories are still fat, about 31% above the five-year average as of August 7, which is the only thing holding it back. But propane is a distillate cousin, and the same record diesel margin pulls it along. We told you three weeks running that the booking window was closing. It is now closing on you.

LCFS &
Cap-and-Invest

Firm
~$63/ton Q1 avg

LCFS credits averaged near $63 a ton in the first quarter of 2026 and have stayed firm since, deficits now exceed credits for the first time in more than four years. 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. On the carbon side, the 48th joint cap-and-invest auction was held Wednesday, August 19, offering 49,016,180 current-vintage allowances at a floor of $27.94. Detailed results post Wednesday, August 26. May’s auction cleared at $28.81 and sold out completely.

Off-Road /
Dyed Diesel

Following on-highway
~73¢ tax spread

Dyed diesel is exempt from California’s 48.2¢ state excise (raised from 46.6¢ on July 1) and the 24.4¢ federal excise, about 72.6¢ a gallon before sales tax. That spread is fixed, so when on-highway runs 20 cents in a week, your bulk delivered price runs it too. There is no tax cushion on the way up. If your supplier did not move 20 cents this week, ask why, and get your next fill on the calendar before they catch up.

Diesel pumping versus electric, at this week’s prices. This is the comparison worth running right now, because diesel just moved 20 cents and power did not. A diesel irrigation engine burns roughly 0.055 gallons per horsepower-hour at load. A 100-HP unit running eight hours is about 44 gallons a day, at Fresno’s $7.052, that is $310 a day, and it was $299 a week ago. The same duty on an electric motor at 83 kW is 664 kWh; at 35 cents a kilowatt-hour that is $232. If you have both, run the electric one this month. Those figures use a 35-cent blended rate and standard engine fuel maps, pull your own tariff and your own engine curve before you commit, because both vary by operation.

And the 5–8 p.m. block still costs the same as always. A 100-HP pump drawing 83 kW straight through the three-hour peak window is 249 kWh a day in the most expensive block on your tariff. On a 15-cent peak-to-off-peak spread that is about $37 a day per pump, or roughly $1,120 a month. Five pumps is $5,600 a month in timing alone. With above-normal heat forecast through September 4, this is the week that setting pays. It is a controller change, not a capital project.

📰

Section 4

News Behind the Numbers

Global · Highest Impact

The Diesel Crack Spread Broke $100 for the First Time Ever

On Tuesday, August 18, the ULSD crack, the margin between a barrel of crude and a barrel of diesel, settled at $102.86 a barrel, the first triple-digit close in the history of the contract. It touched $102.20 intraday Monday. Put that in context: the spread was $42.01 on February 27, the last trading day before this war started, and the previous all-time high was $86.82 in October 2022 when Europe banned Russian fuel imports. In normal years this spread runs $15 to $25. What is driving it is not crude, it is the loss of nearly 4 million barrels a day of Middle East middle-distillate exports, refinery damage across the Persian Gulf, an Asian refining slowdown, and Ukrainian strikes that have taken 20 to 40% of Russian refining capacity offline. Every dollar of that margin is in the gallon you pump.

Global · No Off-Ramp Yet

The Ceasefire Ran Out and Nobody Renewed It

The 60-day ceasefire period expired Monday, August 17, and both Washington and Tehran ruled out extending it. Iran has since intensified attacks on commercial ships trying to transit Hormuz outside Tehran-approved corridors, pushing daily crossings into the single digits against a pre-war average of 130 a day. Midweek the administration announced plans for sweeping new economic sanctions; Tehran called its response “crushing, punishing and devastating.” Treasury Secretary Scott Bessent said he would detail the package Monday, August 24, this morning, as you read this. Here is the part that matters for your budget: Iran’s leadership appears to be betting it can outlast the pressure into the November midterms, and analysts covering the war do not expect a quick resolution. Plan your fall fuel on the assumption this is still going in October.

Fundamentals · Why They Split

Crude Stocks Are Normal. Diesel Stocks Are 13% Short.

Wednesday’s EIA report is the cleanest picture of why your fuel and your neighbor’s gasoline stopped moving together. For the week ending August 14, commercial crude stocks built 4.4 million barrels to 428.8 million, right at the five-year average. Gasoline stocks built too. But distillate inventories fell 1.5 million barrels and now sit about 13% below the five-year average, even with refineries running at 97.2% of capacity and crude inputs up 215,000 barrels a day. Diesel production actually declined, to 5.2 million barrels a day. On top of that, California’s own floor keeps rising: Phillips 66 shut its Los Angeles refinery and Valero stopped making gasoline at Benicia, with UC Davis economists putting the capacity loss at roughly $1.21 a gallon, and the July 1 excise step took diesel to 48.2¢ and gasoline to 63.4¢. None of that comes off when crude comes off.

Central Valley · Harvest Now

A 2.7 Billion Pound Almond Crop Into the Most Expensive Diesel on Record

Harvest is in full swing on a crop projected at 2.70 billion pounds, running well ahead of normal after first shakers went into western Colusa County July 10. Blue Diamond reports hulls splitting across pollinator varieties, a compressed harvest, more gallons in fewer days, while thick hulls in many orchards may slow huller flow rates and stretch processing hours. Pistachios are the other side of the coin: spring heat and pollination problems have the crop running an estimated 600 to 800 million pounds, roughly half of last year, so those hauling miles will be fewer. Walnuts are near full shell size. Here is what the week did to a load: a 400-mile round trip at 6 mpg burns about 67 gallons. At Fresno’s $7.052 that is $470, and it was $453 seven days ago. On 10,000 gallons of harvest fuel, last week alone cost you about $2,020. Our 6-to-24-cent call this week is another $4 to $16 a load, or $600 to $2,400 per ten thousand gallons.

✅

Section 5

What To Do This Week

✓ Action Items

1. Fill bulk tanks before the rack finishes repricing. Retail moved 20 to 28 cents last week and wholesale has not backed off. If your supplier is still quoting off last week’s rack, take the gallons today. We are not calling a bottom, we are telling you the next print is higher.

2. Propane: book it this week or accept the winter price. It went from about 66 cents to 75 in two weeks. Inventories are still 31% above the five-year average, which is the only cushion left. Frost protection, dryers and heaters all price off this window and the window is now moving against you.

3. Check that your hauler applied the new surcharge basis. The DOE figure governing August 19–25 is $5.454, up 19.7 cents. If you are being billed, verify the index. If you are billing, make sure it went out, that is real money at 20 cents a week.

4. Run electric pumps over diesel pumps this month. At Valley diesel and a 35-cent blended power rate, the same 100-HP eight-hour duty is roughly $310 on diesel against $232 on the meter. Power is the one input that did not move against you this week. Use it.

5. Get irrigation out of the 5–8 p.m. block before the next heat run. Above-normal temperatures are forecast through September 4. Roughly $1,120 a month per 100-HP pump on a 15-cent peak spread, and it is a controller setting, not a capital project.

👀 What We’re Watching Next Week

Monday, Aug. 24: Treasury Secretary Bessent details the Iran sanctions package. This is the binary event of the week, a hard package tightens flows further, a soft one takes the top off diesel. Tuesday, Aug. 25: EIA weekly retail price survey. Our call is California diesel $6.90–$7.05. This is where we get graded. Wednesday, Aug. 26: EIA weekly petroleum status report, go straight to the distillate line, not the crude headline. A build there is the first real argument against this move. Wednesday, Aug. 26: detailed results from the August 19 cap-and-invest auction post. Thursday, Aug. 27: EIA natural gas storage report. Friday, Aug. 28: Baker Hughes rig count, North America fell 8 to 804 last week. Ongoing: daily Hormuz transit counts and Ukrainian strikes on Russian refining. Local: huller/sheller flow rates on thick hulls, and evening pump load through the heat forecast to run past Labor Day.

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.

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(559) 816-3889

bryan@bmelloag.com

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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.

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Bryan Mello

B Mello Ag Services, Central Valley, California

B Mello Ag Services · Central Valley, CA

Weekly Energy Update · Week 35 · Published Monday, August 24, 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 17, 2026, released August 18; next release August 25) and Weekly Petroleum Status Report released August 19, 2026 covering the week ending August 14; EIA West Coast (PADD 5) except California No. 2 diesel retail price series; AAA Fuel Prices national, California statewide and California metro averages as of August 23, 2026; DTN Oil Update coverage of the August 17–21 crude, ULSD and RBOB sessions, including the record $102.86 ULSD crack settlement of August 18 and Friday, August 21 settlements, plus DTN commentary on the diesel-crude divergence; Baker Hughes weekly rotary rig count, August 21, 2026; Henry Hub natural gas quotations for August 21, 2026 and EIA Short-Term Energy Outlook natural gas production and storage projections; Mont Belvieu propane spot quotations for August 21, 2026 and EIA weekly propane inventory data for the week ending August 7; CARB Low Carbon Fuel Standard credit transfer data and Argus Media LCFS market coverage; California Air Resources Board cap-and-invest auction notices for the 48th joint auction of August 19, 2026 and the 47th auction results of May 27, 2026; California Department of Tax and Fee Administration motor vehicle fuel and diesel excise tax rates effective July 1, 2026; CPUC PG&E 2027 General Rate Case filing and public forum notices; UC Davis analysis of California refinery closures; and Blue Diamond Growers Crop Progress Report, August 2026, with California nut crop estimates from industry reporting.

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