Gas station with $9.99 diesel exemplifies fuel crisis

A sign displays the price of diesel fuel at $9.99 a gallon at a gas station in San Diego on Sept. 10. (Zoe Meyers/Bloomberg)

At a fuel station in San Diego where diesel is retailing for $9.99 a gallon, Californians can take solace in at least this: In theory, prices can’t get worse.

An employee reached by phone at the Shell station in the city’s Serra Mesa neighborhood confirmed the eye-watering price as of Sept. 11 and said the fuel was still available. While the cost could at some point actually exceed $9.99, on most electronic gas station marquees prices can’t go higher because they’re constrained by three digits. 

That station is an outlier compared to the wider San Diego area, but it illustrates a historic diesel crisis that’s gripping global supply chains, sending prices to records in the U.S. and turning the screws on California’s already tight market. 

Statewide, average diesel prices rose above $8 a gallon in California on Sept. 11, according to the American Automobile Association, a record. Nationally, average U.S. diesel prices rose above $6 a gallon for the first time ever as the war in Iran and Russia-Ukraine conflict roil energy flows. 

That leaves businesses that rely on diesel, which is versatile enough to power moving trucks, heavy equipment and generate electricity, in a predicament. The increased fuel costs are cutting revenue and forcing business owners to raise prices, as energy-driven inflation flows downstream. Consumers, meantime, have been bitten by years of higher prices and are now reeling from skyrocketing gasoline costs stemming from the Iran war. 

QShark Moving, based in California, saw its monthly fuel bill for its all-diesel truck fleet rise from around $8,200 last August to $16,000 this August, said Vlad Kandybovich, the company’s owner. 

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But while those costs nearly doubled, the company only increased its fuel fees for customers by around 17% — from $60 to $70 typically. In a hyper-competitive space for moving, the company can’t afford to raise fees any more, Kandybovich said.

“Our customers are already struggling to pay, because California’s very expensive, and they’re also paying gas prices,” Kandybovich said.

California consistently has the highest fuel costs in the U.S., owing to a lack of pipelines carrying fuel into the state, lost refining capacity and the highest state-level gas taxes in the country. It also uses more renewable diesel, fuel made from oil and fats, than any other state in the country — making the market more eccentric and raising refiner costs. 

Even so, the prices are particularly galling at present, and it’s unclear if the problem will abate soon. Diesel stockpiles are at their lowest seasonal level since 1998 on the West Coast, according to U.S. government data, and benchmark futures are trading near $5 a gallon.

That’s made business more costly for Jose Bedoya, owner of Leaf It To Us, an arborist service in San Diego. Both Bedoya’s truck and wood chipper run on the fuel. The daily price of filling both has risen to roughly $150, he said. And that’s on top of the price of gasoline, which powers the rest of his equipment — including around 10 chainsaws.

“I’m definitely not making the money I’m used to making,” he said.

As a result, Leaf It To Us has started raising prices — especially when quoting new customers for the first time. But some returning customers have also stopped using Leaf It To Us for their tree maintenance, Bedoya said, noting that the price of annual work has jumped by $300 in some cases.

“They can’t justify it, and I don’t blame them,” he said.