DOE presses refiners to lift diesel output as pump diesel tops $6 a gallon
The Energy Department is leaning on refiners at home and abroad to pump out more diesel, Reuters reported, with the national average still above $6 a gallon. Two senior department officials confirmed the talks are live. It follows President Trump's earlier push to force prices down from record highs.
For haulers, diesel is their single biggest cost. Every cent on diesel rides straight into freight rates, and at $6 the math on long hauls gets ugly. Whether jawboning refiners actually adds barrels is another question. Run rates are already high, and the crude side is working against them.
Heating oil reserve
The administration is weighing more loans from the Northeast Home Heating Oil Reserve, sources told reporters, with DOE able to lend as much as a third of the 1 million barrel stockpile.
The mechanics matter. The reserve is small by design, and the government has historically moved barrels through loans and exchanges, with product returned later on terms the department sets. So this works on localized Northeast tightness, easing racks for the dealers who buy there. National supply barely notices. Heating oil futures are near record levels, which is why anyone is talking about it at all.
Freight and crude
Oil shipping rates have surged, and that feeds into everything downstream. Goldman Sachs says the average global rate to move crude is $20 a barrel, up from $3 a year ago, blaming the Iran war and the Hormuz crisis. RBN puts a Gulf Coast to China VLCC cargo above $80 million earlier this month, double September and five times a year ago.
Brent is back to $110 and WTI at $99, both up more than 1% on the day as traders watch Middle East flows and another sizable US inventory draw. Goldman's baseline is $90, and it flags the freight spike as upside risk to that call. For a jobber, high freight stacked on firm crude keeps replacement cost up no matter what the department tells refiners.
Gas tax holiday push
Senator Mark Kelly called for a federal gas tax holiday with gasoline above $4.26 a gallon, pitching it as money back in drivers' pockets. A holiday on the federal gas tax would change street prices, and if it moved fast it could cause some headaches in POS and excise reporting for retailers. Nothing is scheduled. It is a talking point in a high-price autumn, and it tends to resurface whenever pump prices run, so it is worth tracking.
What to watch
Whether the diesel talks produce real volume or just a press line. Watch the next weekly inventory print and where the national diesel average goes from $6.
On heating oil, watch whether DOE formalizes a loan and how much of the reserve actually moves, since that sets the Northeast rack tone heading into the cold.
And watch Hormuz. If the strait stays open and freight eases, crude could soften, though Goldman is not betting on that near term. Rubio's stop at Reliance's Jamnagar complex and the talk of more Venezuelan barrels for Indian refiners are worth half an eye too, because where heavy crude gets refined eventually shows up in the diesel the US has to import.