If you thought a decline in oil prices would bring some relief at gas and diesel outlets, we’re sorry. It didn’t happen.
Oil prices did fall on Sept. 16, as much as 3.5% during the day. But the story was different for motorists.
Nationally, the price of gasoline climbed nearly 1% from a day earlier and is up more than 50% so far in 2026.
Related: Costco limits motor oil purchases as crude hits 4-month highs
AAA Fuels put the average price of gasoline at $4.367 a gallon on Sept. 16, up 0.9% from a day earlier and 7% in September alone. GasBuddy’s late-afternoon average was $4.423 a gallon, up from $4.359 a day earlier.
The price of diesel was up almost as much for the day and is now up more than 77% in 2026, AAA data shows.
And high prices are likely to last at least until mid-November, one economist said.
AAA estimated the national average price of diesel at $6.3103 a gallon, up 0.7% from a day earlier and up 12.7% in September alone.
Diesel prices affect vast amounts of U.S. economic activity because it is the fuel of choice for truckers and for machinery used by farmers (tractors, combines and the like), construction companies (earth movers and cranes, as examples) and railroads, whose locomotives mostly use diesel.
Rising diesel prices are forcing many transportation companies, whether railroads or trucking companies, to add surcharges to their base pricing levels, if they can. The problem is once a surcharge is announced, diesel prices go up again.
Prices took off after the United States and Israel launched attacks against Iran on Feb. 28, and what the Trump Administration thought would be a war of a few weeks is now in its seventh month.
More Oil, Gas & the Economy:
- Fed Delivers Expected Rate Hike. More on the Way?
- Diesel Export Ban May Be Good for U.S.; Fed Predictions; My 3 Energy Stocks
- Drivers lose control over gas price squeeze
The war has reduced substantially the amount of crude oil shipped via the Strait of Hormuz from the Persian Gulf. Roughly 20% of the world’s crude oil passed through the strait before the war.
The global energy picture has been complicated by the ongoing war between Ukraine and Russia.
Ukraine drone and missile attacks have severely cut Russian exports of diesel and other fuels.
Exports from the United States have helped make up the shortfall, but U.S. domestic inventories have been shrinking, Matt Muenster, chief economist of Breakthrough, a transportation consulting firm, told Overdriveonline.com.
High diesel prices are ‘like science fiction’
The situation is crazy enough that Ed Elkins, executive vice president of Norfolk Southern Corp. (NSC), noted diesel prices at more than $8 a gallon when he and other companies arrived at a California investment conference this week. He added that the California pricing “is like science fiction.”
It got worse. On Sept. 16, diesel in California averaged about $8.27 a gallon, AAA said.
Norfolk Southern is one of the four largest U.S.-based railroad companies.
U.S. railroads, including Norfolk Southern, use diesel fuel to power onboard generators that, in turn, power the locomotives. Only on rail lines along the Northeast U.S. corridor do electric locomotives predominate.
Rising fuel prices factor in Fed rate hike
Rising energy prices are one reason the Federal Reserve boosted its key interest rate, the federal funds rate, to 3.75% to 4%.
It was the Fed’s first interest-rate increase in three years.
Federal Reserve Chairman Kevin Warsh’s comments that the central bank intends to concentrate on bringing inflation down over the next few years set off a broad stock market pullback.
Energy stocks generally were lower.
Related: From gas pumps to bond markets: stocks are getting squeezed
