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September 23, 2026
Partner, Chief Economist
The US Gulf Coast diesel crack spread cleared $100/bbl for the first time on record in August against a normal range of $15 to $30. Unlike a gasoline spike, which lands on consumers as a one-time tax on discretionary spending, diesel is an intermediate input embedded in the delivered cost of nearly every physical good, from freight and rail to agriculture and construction.
That means the rise in diesel prices does not stay in the energy line of the CPI but migrates with a lag into core goods and services, which is exactly the kind of pass-through the Fed cannot dismiss as transitory.
The bottom line is that diesel margins are now setting the long end of the curve because diesel crack spreads are an important driver of future core inflation.
Note: FUCLM1 Index: US Gulf Coast ULSD–WTI crack spread, front-month futures ($/bbl, lhs). USGG10YR Index: US Generic Government 10-Year Treasury yield (%, rhs). Sources: Bloomberg, Apollo Chief Economist
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