Karl Miller’s latest private assessment, dated September 16 and titled “Judgment Day Has Arrived,” makes a single governing claim about diesel, jet fuel, and kerosene: physical demand is now outrunning promptly deliverable supply. Not the price of the barrel — the delivery of it. In Miller’s framing the market has crossed from a pricing problem, which money solves, to a deliverability problem, which money alone does not. The next phase, he argues, forces buyers to compete not just for fuel but for delivery capacity and for the cash to fund both at once.
I asked my expert, ChatGPT, about this.
Diesel supplies are running low, and in many places diesel prices are over $6 per gallon or not available. The problem will probably get worse before it gets better. What would happen to the US economy if diesel prices go above an average of $8 per gallon and remain there for the next year?
Yes. If the national average diesel price rose above $8/gallon and stayed there for a full year, I would expect a substantial negative shock to the U.S. economy—probably a combination of higher inflation and materially weaker economic growth. Whether it produced an outright recession would depend heavily on why diesel was $8 and whether actual shortages/rationing accompanied the price increase.
Your premise about current conditions is broadly correct. EIA reports that the national average reached $6.285/gallon on September 14, up from $5.26 only five weeks earlier. U.S. distillate inventories are about 13% below the five-year seasonal average, while U.S. refineries were operating at about 97% utilization, leaving relatively little easy capacity to increase production. EIA currently expects inventories to remain unusually low, although its baseline forecast does not anticipate $8 diesel for a year: it forecasts about $5.55 in Q4 2026 and $4.40 in 2027.
What $8 diesel would do
The important thing about diesel is that it isn't primarily a consumer fuel. It is an input into producing and transporting almost everything else. Trucks, agricultural machinery, construction equipment, mining equipment, some rail operations, generators, and parts of industry depend on diesel. EIA specifically notes that higher diesel prices raise road and rail freight costs and affect agriculture and heating oil.
Suppose diesel otherwise would have averaged roughly $4–$5. At $8, fuel expenses for a long-haul truck could approximately double. A tractor-trailer getting 6.5 mpg would have these fuel costs:
| Diesel | Fuel cost per mile |
|---|---|
| $4 | $0.62 |
| $5 | $0.77 |
| $6 | $0.92 |
| $8 | $1.23 |
For a truck traveling 100,000 miles annually, moving from $5 to $8 adds about $46,000 per year in fuel expense.
Trucking companies cannot absorb anything close to that indefinitely. They would impose fuel surcharges and increase freight rates. Those costs would eventually work their way through Walmart, grocery stores, Amazon deliveries, construction materials, auto parts—essentially the entire physical-goods economy.
The biggest effects I'd expect
1. Another serious inflation impulse. Food would be particularly exposed because diesel appears repeatedly in its production chain: tractors and combines → trucks carrying crops → food processors → refrigerated trucks → supermarkets. Construction materials and manufactured goods would also become more expensive. This is exactly why the present diesel spike is already attracting inflation concerns.
I wouldn't assume that $8 diesel means CPI inflation rises by some mechanically fixed amount—the pass-through depends on margins, demand and monetary conditions—but sustained $8 diesel would make returning inflation to 2% considerably harder.
2. Trucking would undergo a shakeout. Large fleets usually have fuel-surcharge arrangements and hedging opportunities. Small owner-operators are much more vulnerable. Some would park trucks because certain loads would simply cease being profitable.
That creates a second-order problem: fewer available trucks → higher freight rates → higher product prices → reduced demand.
3. Agriculture would get hit unusually hard. Farmers use substantial quantities of diesel directly, particularly during planting and harvest. Diesel also affects fertilizer, trucking and other agricultural inputs. Some farmers could absorb one bad season; sustained prices for several seasons would increasingly change planting decisions and margins.
4. Construction would slow. Excavators, loaders, bulldozers, cranes and trucks consume enormous quantities of diesel. Contractors would increase bids, projects would become less economical, and some marginal projects would be postponed. That would affect both housing and commercial construction.
5. Consumers would get squeezed even if they don't own diesel vehicles. This is an important distinction from a gasoline shock. A person driving an EV doesn't escape an $8 diesel economy. They still buy food delivered by trucks, live in buildings constructed with diesel machinery, and purchase products transported through diesel-dependent supply chains.
6. The Federal Reserve would face an unpleasant dilemma. The initial shock would be supply-driven rather than excessive consumer demand. Raising interest rates doesn't manufacture diesel. But if fuel costs began feeding into wages, services and inflation expectations, the Fed could feel compelled to maintain tighter monetary policy even as economic growth weakened.
That is the classic recipe for stagflation: weak growth combined with persistent inflation.
The really dangerous scenario isn't $8 diesel—it's unavailable diesel
This distinction matters enormously.
If diesel were $8 but reliably available, the economy would adapt. Freight rates would rise, companies would consolidate shipments, rail would become relatively more attractive, inefficient trucking operations would close, consumers would reduce purchases, and eventually demand destruction would help bring prices down.
If diesel were $8 and frequently unavailable, the economic consequences would be considerably worse.
A trucking company can calculate a fuel surcharge for $8 diesel. It can't operate a truck without diesel.
Actual regional shortages could therefore produce temporary disruptions in food distribution, agriculture, construction, mining and manufacturing. That's when the situation begins looking less like ordinary inflation and more like a supply-chain crisis.
There is an important self-correcting mechanism
I would be skeptical that the United States could maintain an $8 average for an entire year without enormous behavioral and market responses.
At $8, refiners would have an extraordinary incentive to maximize distillate production; imports would become more attractive; exports could decline; businesses would conserve fuel; trucking demand would fall; consumers would buy fewer transported goods; and weaker economic activity itself would reduce diesel consumption.
We're already seeing the first part of that process. U.S. refiners are operating near practical capacity, and current diesel refining margins are extremely high.
That's why EIA's current forecast assumes today's extraordinary conditions eventually ease rather than projecting today's price increases indefinitely.
My rough economic scenario
If you specifically imposed the hypothetical "$8 national average from roughly late 2026 through late 2027", I'd think about the consequences approximately like this:
$8 but plentiful: severe cost shock → noticeably higher goods/food inflation → weaker consumer spending → trucking/agriculture/construction stress → substantially slower GDP growth and elevated recession risk.
$8 plus intermittent regional shortages: all of the above + supply-chain disruptions → substantially greater recession risk.
$8 plus persistent nationwide physical shortages/rationing: potentially a very serious recession, because the constraint would no longer simply be price. Businesses could literally be unable to move goods.
One other reason I'm concerned about the current situation is that it isn't primarily that America has run out of crude oil. EIA says U.S. distillate production this year has actually been the highest since 2019, while refineries are running near maximum utilization. The problem is unusually tight global refined-product supply, strong export demand and depleted domestic inventories. That makes this somewhat harder to fix quickly than simply increasing crude production.
So I think $8 diesel for a few weeks would be painful; $8 for twelve months would be a genuine macroeconomic event. And if the reason it remained at $8 was continuing physical scarcity rather than merely expensive crude oil, I'd be considerably more worried about the shortage than about the $8 number itself.
