Our economy runs on diesel fuel. That includes the trucks and trains that deliver goods and raw materials, along with finished products, from cars and trucks to Amazon packages, bulk corn, coal, oil, and more. These all depend on diesel fuel, and all reflect the rising and falling costs of diesel fuel. We are all affected by the cost of diesel fuel, whether we are conscious of it or not; and those of us who drive diesel pickups, well, you'd better believe we're conscious of it when it costs $200 to fill the tank.
And, right now, for a number of reasons but the ongoing dust-up in the Middle East being a large part of it, diesel fuel is expensive. It's expensive all over the United States, but when it comes to the one commodity that could make or break an economy, diesel fuel, the one state that seems determined to push that price through the roof is, of course, California.
As of this writing, the median price for diesel fuel in the lower 48 is about $6 per gallon. In the most commonly mentioned, business-friendly states, it's cheaper; in Texas and Florida it's $5.90. In my old stomping grounds of Iowa, it's at $5.80, not surprising when you contemplate how much agricultural equipment runs on diesel.
But in California? How much does this fuel, the blood that keeps our economy alive, cost? $8.00 a gallon. That's far higher than any of the neighboring states; Oregon's median price is $6.33, Arizona is at $6.50, and Nevada, $6.65. Why? Why is diesel so expensive in the once-Golden State? Well, here's why, and I'm going to tell you.
First, taxes. California taxes diesel fuel to the tune of nearly a dollar a gallon. That includes an excise tax of $0.482 and a sales tax of $0.4474, for a total tax of $0.9294. That's roughly 93 cents per gallon, in every tank of diesel. That would be an added $33, more or less, to fill the tank on my F-350; imagine what the added cost is to fill an 18-wheeler.
Second, refining capacity. In the 1980s, California had over 50 refineries that could and did produce diesel fuel. Now? Fourteen.
Third and finally, oil. California has plenty of petroleum. But they aren't using it. Oil production and new drilling permits, since the 1980s, have cratered. All that oil isn't doing anyone any good sitting in the ground, and yet that's where California, under the impeccably coiffed Democrat Governor Gavin Newsom, seems determined to keep it.
Here in Alaska, honestly, things aren't much better, with diesel fuel at over $6.00/gallon, at least here in our part of the Valley. But our problem isn't extraction nor taxes; it's refineries. There are three working commercial refineries in Alaska, on in Kenai, one in the North Pole (near Fairbanks), and one near Valdez. Of those three, only the Kenai and Valdez produce the ultra-low sulfur diesel (ULSD) used in transport. But taxes? Under nine cents a gallon. In fact, we have the lowest gasoline and diesel taxes in the nation; our problem is refinery capacity. California doesn't have that excuse. They had plenty of refineries; they shut them down. They have plenty of oil; they aren't drilling. And they have the highest fuel taxes in the nation.
So, California Democrats, when they are looking at someone to aim their inflation ire at, had darn well better look right in the mirror.
Editor’s Note: The 2026 Midterms will determine the fate of President Trump’s America First agenda. Republicans must maintain control of both chambers of Congress.
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