|
Having trouble viewing this email?
|
Weekly Energy Update · Week 36
Fuel & Energy Report
B Mello Ag Services · Central Valley, CA
Published Monday, August 31, 2026 • Week in Review: August 24–30 • Forecast: August 31–September 6
|
|
♦ CA DIESEL $7.295 (▲15¢ WK) ♦ CA REGULAR $5.680 (▲7¢ WK) ♦ US DIESEL $5.652 ♦ WTI $83.40 (▼4% WK) ♦ BRENT $88.10 (▼6% WK) ♦ ▼ ULSD CRACK OFF ITS RECORD ♦ HORMUZ CORRIDOR TALKS
|
|
|
|
📈 This Week’s Call
The world market turned. California has not yet. We look for the top to form this week — diesel up 0 to 13¢, then done climbing.
We called diesel higher again last Monday and gave you a range of $7.20 to $7.38. It closed the week at $7.295, up 15 cents, right through the middle of that call. Our EIA call of $6.90–$7.05 printed at $7.040. Our gasoline call of $5.62–$5.74 printed at $5.680. Three for three. Now here is the part that matters more than the scorecard: the wholesale market went the other direction this week. Brent fell about 6% and WTI about 4% after Iran and Oman floated a phased shipping corridor through Hormuz and Gulf producers started pushing more barrels through it. The ULSD crack, which set an all-time record of $102.86 on August 18, came back to roughly $93–$94. Retail runs one to two weeks behind wholesale, so you are still paying for the mid-August spike and will for a few more days. This is the week the climb stops. It is not yet the week it comes back down.
|
|
| ⛽ |
Section 1
Last Week at the Pump
|
|
EIA’s survey for the week ending Monday, August 24 put California on-highway diesel at $7.040, up 25.5 cents — the biggest single-week jump of this run. California regular went up 5.3 cents to $5.450. AAA’s Sunday, August 30 read carries it further: California diesel $7.295, up 15.3 cents on the week, and regular $5.680, up 6.9 cents. Diesel is now $2.16 a gallon above a year ago and 40 cents above a month ago. Regular is up $1.08 on the year. The split we described last week is still the whole story, but it narrowed a little.
| CA Diesel |
| $7.295 |
| statewide · AAA 8/30 |
| ↑ 15¢ wk · up $2.16 from a year ago. |
| CA Regular |
| $5.680 |
| statewide avg · AAA 8/30 |
| ↑ 7¢ wk · record-priced August nationally. |
| WTI Crude |
| $83.40 |
| front month · Fri 8/28 |
| ↓ ~4% wk · first down week in three. |
| ULSD Crack |
| ~$93 |
| per bbl · late Aug, Gulf vs WTI |
| ↓ off the record · peaked $102.86 on 8/18. |
Central Valley & Reference Markets — On-Highway Diesel
| Market |
Diesel |
Wk |
Note — and where regular sits |
| Stockton–Lodi |
$7.121 |
▲ 13¢ |
Now the cheapest diesel in the Valley and 17¢ under the state average. North Valley hauling reference. Regular $5.491. AAA, August 30. |
| Hanford–Corcoran |
$7.126 |
▲ 16¢ |
Second week running with one of the sharpest moves in the Valley. Regular $5.556. AAA, August 30. |
| Modesto |
$7.136 |
▲ 17¢ |
Regular $5.465 — still the cheapest gasoline among the Valley metros we track. AAA, August 30. |
| Bakersfield |
$7.140 |
▲ 14¢ |
Southern Valley moved less than the state again. Regular $5.663, the highest gasoline in the Valley. AAA, August 30. |
| Madera–Chowchilla |
$7.165 |
▲ 14¢ |
Cooled off sharply after last week’s 28¢ jump. Regular $5.683. AAA, August 30. |
| Sacramento |
$7.171 |
▲ 14¢ |
Regular $5.599. AAA, August 30. |
| Visalia–Tulare |
$7.177 |
▲ 17¢ |
Up 49¢ in a month — the biggest 30-day move on this table. Regular $5.576. AAA, August 30. |
| Merced |
$7.250 |
▲ 9¢ |
Moved first, so it is moving least — second straight week at the bottom of the change column. Regular $5.577. AAA, August 30. |
| Fresno |
$7.270 |
▲ 22¢ |
Biggest weekly move in the Valley and now under 3¢ below the state average. We told you to watch Fresno first as harvest trucking bid into the rack. It did. Regular $5.625. AAA, August 30. |
| California avg. |
$7.295 |
▲ 15¢ |
AAA, August 30. EIA’s week-ending 8/24 survey printed $7.040, up 25.5¢. Regular $5.680. Diesel is up 40¢ in a month and $2.16 in a year. |
| U.S. avg. |
$5.652 |
▲ 20¢ |
EIA, week ending 8/24. This is the DOE figure your hauler’s surcharge runs off. National regular $4.079. AAA, August 30. |
Diesel detail: EIA’s survey for the week ending August 24 put California on-highway diesel at $7.040, up 25.5 cents, against a national average of $5.652. That is a $1.39 California premium — six cents wider than the week before. 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 $5.652 for the week of August 24 is the figure that governs fuel surcharges effective August 26 through September 1. That is 19.8 cents higher than the week before, on top of the 19.7 cents the week before that. Two weeks, roughly forty cents. If you are billing a surcharge and it has not moved twice, you left money on the table.
|
|
| 🔮 |
Section 2
The Week Ahead: Our Forecast
|
|
For the week of August 31 through September 6. Crude broke lower for the first time in three weeks — WTI finished Friday near $83.40 and Brent near $88.10, down roughly 4% and 6% — and the diesel crack backed off its August 18 record to about $93 a barrel. Retail has not seen that yet. It is still working through the mid-August spike. Our view is that this is a topping week, not a falling one, and that the relief you are owed shows up at the pump in the middle of September.
| Fuel |
Expected Range |
Direction |
| CA On-Highway Diesel |
$7.30 – $7.42 |
▲ Higher, but decelerating — 0 to 13¢, against 15¢ last week and 20¢ the week before. We expect the peak inside ten days. |
| CA Regular Gasoline |
$5.68 – $5.80 |
▲ Modestly higher — 0 to 12¢. Gasoline stocks are the tightest seasonally since 2012 and the Labor Day pull runs into this window. |
| EIA Print, Tue 9/1 |
CA diesel $7.14 – $7.26 |
▲ Higher — EIA lags AAA by a few days and currently runs about 25¢ under it. Note the release is Tuesday, not Monday. This is where our call gets graded. |
| Central Valley Retail |
Diesel 3 to 17¢ under state avg. |
▲ Follows, and the Valley discount kept shrinking — it was 9 to 18¢ last week. Fresno is now within 3¢ of the state average. Harvest hauling is the reason. |
| Crude (WTI) |
$79 – $88 |
▼ Biased lower — Hormuz flows are rising and stocks are above the five-year average. OPEC+ meets Sunday, September 6; that is the two-way risk. |
▲ Pushing Prices Up |
Diesel inventories keep falling. Distillate stocks dropped another 2.2 million barrels for the week ending August 21 and sit about 14% below the five-year average — a record seasonal low heading into winter demand.
California’s own barrel is scarce. Suppliers reported outages and difficulty pulling CARB diesel at regional terminals in late August, with renewable diesel plant maintenance compounding it. Los Angeles CARB diesel rack averaged just under $5.16 a gallon Friday.
Carbon just got more expensive. The August cap-and-invest auction cleared at $32.48, up $3.67 from May. That is a floor under every California gallon, and it went up.
|
|
▼ Holding Prices Down |
Hormuz is starting to move again. Iran and Oman outlined a phased shipping corridor on August 26, including joint mine clearing, and Gulf producers have been raising exports through the strait. Crude fell three straight sessions on it.
The crack came off the record. The ULSD margin peaked at $102.86 on August 18 and has since settled back near $93–$94. That $10 a barrel is the first real crack in this rally, and it is worth roughly 23¢ a gallon on its own.
Crude stocks are comfortable. Commercial crude ended August 21 at 428.9 million barrels, 1% above the five-year average, with refineries running at 97.4% of capacity.
|
|
|
Our read: For four weeks we told you diesel was going higher and to book gallons rather than wait for a pullback. That was right, and it cost anyone who waited about 60 cents a gallon. This week we change the call, carefully. Crude broke, the crack broke, and Hormuz is loosening — the three things that built this move are all going the other way at once. But you buy retail, not futures, and retail lags by one to two weeks. That means diesel goes up a little more, tops out, and starts giving some of it back around the middle of September. Our advice changes accordingly: top off what you need to run the next two weeks of harvest, and stop there. Do not lock a long contract at this level. The honest counter-argument is California’s own supply, which is genuinely short right now — terminal outages, renewable diesel plants down for work, distillate inventories at a record seasonal low. A tight local market can hold retail up for weeks after the world market has moved on, and California has done exactly that before. What would invalidate this call: the Hormuz corridor framework falling apart, the ULSD crack pushing back above $100, or another distillate draw in Wednesday’s report. Watch the crack, not the crude headline.
|
|
| ⚡ |
Section 3
Your Other Energy Costs
|
|
The National Weather Service has at least a slight risk of extreme heat flagged for central and southern California through September 6. That is the whole forecast week. Pump load stays up, the 5–8 p.m. block stays expensive, and the grid gets tested. Two items on this list moved in your favor this week — read the propane and natural gas rows.
| Input |
Where It Is |
What It Means for You |
Electricity
(pump power) |
~35¢/kWh
CA average |
This is the last week of PG&E’s summer season, which runs June through September, with the peak window at 5–8 p.m. daily, holidays included. With extreme heat risk flagged through September 6, expect the evening block to be the most expensive of the year and watch for grid conservation appeals. PG&E’s 2027–2030 General Rate Case remains pending at the CPUC; nothing changes your bill this week, but new rates from that case would not take effect before January 2027. Plan your 2027 pumping budget against it, not against today’s tariff. |
Natural Gas
(Henry Hub) |
Low
~$2.90/MMBtu |
Gas pushed above $2.90 late in the week, a five-week high, after utilities injected just 15 Bcf into storage against a five-year average of 33 Bcf for the period. Even so, working stocks stand at 3,184 Bcf, about 6% above the five-year average, and Lower 48 production is running a record 111.4 Bcf a day in August. Still the cheapest input on this page — good for gas-fired pumps, dryers and dehydrators. Watch it, but do not panic about it. |
| Propane |
Pressure eased
~79¢/gal Mont Belvieu |
We warned three weeks running that the booking window was closing. It just cracked back open a little. Propane inventories built 2.5 million barrels in the week ending August 21 and now sit 32% above the five-year average, up from 31%. Mont Belvieu postings ran about 79 cents at mid-month. With crude off and the build in the tank, the squeeze paused. If you have not booked frost protection, dryer and heater gallons, this pause is the opening — but it is a pause, not a reversal, and winter still sits on the other side of it. |
LCFS &
Cap-and-Invest |
Higher
$32.48/ton allowance |
This is the change on the page. Detailed results from the August 19 joint cap-and-invest auction posted August 26: current-vintage allowances cleared at $32.48, up $3.67 from May’s $28.81, with all 49,016,180 allowances sold — a fifth straight sold-out auction and roughly $870 million into the state climate fund. Future vintage cleared $32.75. On the LCFS side, credits averaged near $63 a ton in the first quarter of 2026 and have stayed firm, with deficits exceeding credits for the first time in more than four years. Diesel generates more deficits per gallon than gasoline. Neither of these falls when crude falls. |
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 your bulk delivered price tracks on-highway both directions. The practical point for this week: when wholesale finally rolls over, your supplier will be slower to pass the drop down than they were to pass the rise up. Ask for the rack basis in writing on your next fill so you can hold them to it in two weeks. |
Diesel pumping versus electric, at this week’s prices. The gap got wider again. 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 $7.270, that is $320 a day, against $310 last week and $299 the week before. The same duty on an electric motor at 83 kW is 664 kWh; at 35 cents a kilowatt-hour that is $232. That is $87 a day, per pump, for running the wrong one. Over a 30-day month on three pumps it is about $7,900. 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.
What the carbon auction actually costs you. A gallon of diesel puts out roughly 10.2 kilograms of CO2. At the new $32.48 allowance price that is about 33 cents a gallon of embedded carbon cost, against about 29 cents at May’s clearing price — call it three to four cents a gallon added, and it does not come back off when crude falls. On 10,000 gallons of harvest fuel that is $300 to $400 you will not see itemized anywhere on the invoice. It is our estimate from the allowance price and standard emission factors, not a published pass-through, but it is the right order of magnitude and it is worth knowing where part of that $7.29 is going.
|
|
| 📰 |
Section 4
News Behind the Numbers
|
|
|
Global · Highest Impact
Iran and Oman Floated a Hormuz Corridor. Crude Fell Three Days Straight.
|
|
On Wednesday, August 26, Iran and Oman outlined a phased framework for a temporary shipping corridor through the Strait of Hormuz, including a joint mine-clearing initiative. Oil fell for a third consecutive session on the news. The next day Bloomberg reported Hormuz oil flows creeping higher as Gulf producers ramp exports, and Iran’s foreign minister met Qatar’s prime minister in Tehran to discuss de-escalation and reopening the strait. This all followed the sanctions package Washington rolled out Monday, August 24, which knocked Brent down about 2.5% on the day — the opposite of what the market had braced for. Two cautions before you spend the savings. A second commercial vessel was targeted in the strait that same week, so nothing is settled. And a framework is not a corridor; the EIA’s current outlook still assumes Hormuz disruption runs through 2026. But this is the first genuinely bearish week for your fuel bill since February.
|
|
California · Why You Feel It Last
“Drier Than a Desert” — California Diesel Terminals Ran Short
|
|
While the world market was selling off, California’s own diesel market went the other way. OPIS reported suppliers hitting outages and difficulty pulling CARB diesel at regional terminals in late August, driven by heavy pulls into harvest and maintenance work at renewable diesel plants. Los Angeles-area CARB diesel rack averaged just under $5.16 a gallon Friday, with R99 near $5.08, while spot September-delivered LA CARB diesel implied around $4.64. That gap between rack and spot is the tell — it means the physical barrel in the tank is worth more than the paper barrel next month, which is what a genuinely short market looks like. This is why our forecast says higher this week even though crude fell. The world can loosen and your terminal can still be dry.
|
|
Policy · Costs That Do Not Fall
Carbon Allowances Cleared $32.48 — Up 13% in One Quarter
|
|
Detailed results from California’s 48th joint cap-and-invest auction posted Wednesday, August 26. Current-vintage allowances cleared at $32.48, up $3.67 from May’s $28.81 — a 12.7% jump in a single quarter. Every one of the 49,016,180 current-vintage allowances sold, the fifth consecutive sold-out auction, raising roughly $870 million for the state’s climate fund. Future-vintage allowances cleared $32.75. Analysts read the move as the market pricing in regulatory certainty after CARB finalized program updates in May. Here is the part for your budget: allowance costs land in the price of every gallon refined and sold in California, and unlike crude they only go one direction under a declining cap. When people ask why California diesel sits $1.39 above the national average, this is one of the pieces — along with 48.2¢ state excise, LCFS deficits, and roughly 20% of the state’s refining capacity retired in the past year.
|
|
Central Valley · Harvest Now
Peak Harvest Meets Peak Diesel, and Fresno Led the State
|
|
Almond harvest is running well ahead of normal on a crop projected at 2.70 billion pounds, with hulls splitting across pollinator varieties — a compressed harvest, more gallons in fewer days — and thick hulls in many orchards slowing huller flow rates and stretching processing hours. Pistachios run the other way at an estimated 600 to 800 million pounds, roughly half of last year, so those miles will be fewer. Walnut harvest is next up. You can see the trucking demand in the price table: Fresno posted the biggest weekly diesel move in the Valley at 22 cents and closed to within two cents of the state average, after sitting nine cents under it a week ago. What the week did to a load: a 400-mile round trip at 6 mpg burns about 67 gallons. At Fresno’s $7.270 that is $485, against $470 seven days ago and $453 two weeks ago. On 10,000 gallons of harvest fuel, this week alone cost about $2,180. Our 0-to-13-cent call this week is another $0 to $9 a load.
|
|
| ✅ |
Section 5
What To Do This Week
|
|
|
✓ Action Items
| 1. Buy two weeks, not two months. This is a change from what we told you the last four Mondays. Top off enough to run harvest through mid-September and stop. The wholesale market turned and retail follows it down — just slowly. Do not sign a long fixed-price contract at $7.29. |
| 2. Get your supplier’s rack basis in writing on this fill. When wholesale rolls over, delivered prices come down slower than they went up. Having the basis on paper is how you make that conversation short in two weeks. |
| 3. Propane: the window reopened a crack — use it. Inventories built 2.5 million barrels and now sit 32% above the five-year average, and crude came off. If you skipped booking frost protection, dryer and heater gallons last week, do it this week. This is a pause, not a reversal. |
| 4. Check your surcharge basis moved twice. The DOE figure governing August 26 through September 1 is $5.652, up 19.8 cents on top of the prior week’s 19.7. Two consecutive twenty-cent weeks. If you bill surcharges and only invoiced one, fix it before month-end closes. |
| 5. Run electric over diesel, and stay out of 5–8 p.m. The spread is now about $88 a day per 100-HP pump in favor of the meter. And this is the final week of PG&E’s summer season with extreme heat risk flagged through September 6 — roughly $1,120 a month per pump sits in that three-hour block. It is a controller setting, not a capital project. |
|
|
👀 What We’re Watching Next Week
Tuesday, Sep. 1: EIA weekly retail price survey — note it moves to Tuesday this week. Our call is California diesel $7.14–$7.26. This is where we get graded. Wednesday, Sep. 2: EIA weekly petroleum status report — go to the distillate line first. Another draw and our topping call is early; a build confirms it. Thursday, Sep. 3: EIA natural gas storage report. Last week’s 15 Bcf injection was well under the five-year average — two in a row would matter. Friday, Sep. 4: Baker Hughes rig count and the August jobs report. Sunday, Sep. 6: OPEC+ meets. The group completed its rollback of voluntary cuts with September’s 188,000 bpd increase and has signaled it will hold quotas steady through year-end — but this is the binary event of the week. Ongoing: whether the Iran–Oman corridor framework becomes an actual corridor, and daily Hormuz transit counts. Local: extreme heat risk through September 6, evening pump load, CARB diesel terminal availability, and huller flow rates on thick hulls.
|
|
|
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
|
|
|
|
New
Every report we publish now lives on our own site
Free to read, no signup, no paywall — this Weekly Energy Update plus the Field Report, Ag Crime Report, Economic Update, Weekly Fishing Report and every Special Report we have ever sent. Bookmark it and you will never have to dig through your inbox for a number again.
bmelloag.com
|
|
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
|
|
|
B Mello Ag Services · Central Valley, CA
Weekly Energy Update · Week 36 · Published Monday, August 31, 2026
Every issue we have ever published is free at bmelloag.com/reports — field conditions, ag crime, markets, fuel and fishing.
(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 24, 2026, released August 25; next release September 1) and Weekly Petroleum Status Report released August 26, 2026 covering the week ending August 21; AAA Fuel Prices national, California statewide and California metro averages as of August 30, 2026, and the AAA fuel price release of August 27, 2026; Rigzone and Trading Economics crude quotations for Friday, August 28, 2026 and Rigzone coverage of the August 26 EIA Weekly Petroleum Status Report, including Saxo Bank commentary on refined product inventories; OPIS West Coast market coverage of California CARB diesel rack, R99 and spot pricing for late August 2026; industry reporting on the ULSD crack spread including the record $102.86 settlement of August 18, 2026 and its subsequent retracement; EIA Natural Gas Weekly Update and working gas in storage for the week ending August 21, 2026, and EIA Short-Term Energy Outlook production and storage projections; Mont Belvieu propane postings for mid-August 2026 and EIA weekly propane inventory data for the week ending August 21; CARB Low Carbon Fuel Standard credit transfer data and Argus Media LCFS market coverage; California Air Resources Board cap-and-invest auction results for the 48th joint auction, released August 26, 2026, with Environmental Defense Fund and Carbon Herald analysis; California Department of Tax and Fee Administration motor vehicle fuel and diesel excise tax rates effective July 1, 2026; CPUC and PG&E 2027–2030 General Rate Case filings; UC Davis analysis of California refinery closures; CNBC, CNN, Bloomberg and Fox News reporting on the August 24 sanctions package and the August 26–27 Iran–Oman Strait of Hormuz corridor framework; OPEC Secretariat statement of August 2, 2026 and reporting on the September 6, 2026 meeting; National Weather Service extreme heat outlooks for central and southern California through September 6, 2026; and Blue Diamond Growers Crop Progress Report, August 2026, with California nut crop estimates from industry reporting.
Cell: (559) 816-3889
Copyright © . All rights reserved.
You are receiving this because you opted in at B Mello Ag Services.
Update your preferences •
Unsubscribe from this list •
|
|
