By Jessica Cusworth
With analysis by Joe Maxwell and Angela Huffman
Every combine harvesting a field, every tractor working the soil, and every truck hauling grain depends on fuel. When diesel prices spike, farmers pay more to bring in the harvest and get it to buyers, leaving them with less money from every sale.
On October 5, 2026, the average U.S. price of on-highway diesel hit $6.20 a gallon, nearly $2.49 higher than a year earlier.
Meanwhile, major oil companies are reporting billions in earnings.
President Donald Trump’s October 5 executive order temporarily allows off-road diesel, which is tax-exempt, to be used on highways without penalties. That may ease some immediate costs, but it doesn’t address whether oil refinery mergers and closures have worsened fuel-price spikes, or why oil companies’ earnings are soaring.
When crops are ready to harvest, farmers need fuel to get the job done, no matter the price. Those increased costs ripple through the food supply chain, affecting everyone from farmers to grocery shoppers.
Higher Fuel Costs Reach the Grocery Aisle
When diesel prices rise, it costs more to produce food and get it to market. Diesel powers farm equipment and the trucks that deliver seed, fertilizer, animal feed, and other supplies to farms. It also fuels the trucks that haul crops and livestock to buyers and deliver food to grocery stores.
But higher production costs don’t mean farmers can charge more. Farmers selling into commodity markets generally can’t raise their prices to cover those added expenses. Market prices and buyers largely determine what they earn, leaving them with less money after paying their bills.
Farmers have little ability to pass along higher costs, but the large corporations between farms and consumers do. When their transportation costs rise, they can pass those costs on to shoppers, contributing to higher grocery prices.
While farmers and consumers face higher costs, oil companies are reporting enormous gains.
Oil Companies Reap Billions
Two major oil companies are reporting billions in earnings from refining crude oil into gasoline, diesel, and other fuels.
Phillips 66’s refining business earned $3.06 billion before taxes in the second quarter of 2026, up from $208 million in the first quarter. Its refining margin, which measures the gap between the value of the fuel produced and the cost of the crude oil used to make it, more than doubled from $10.11 to $24.08 per barrel.
Marathon Petroleum also reported a sharp increase in earnings. The company’s total net income rose from $1.2 billion in the second quarter of 2025 to $5.1 billion in the second quarter of 2026. That figure reflects the company’s overall profit, not just its refining business. Over the same period, Marathon’s refining and marketing margin also increased sharply from $17.58 to $36.33 per barrel.
These earnings come as years of industry consolidation have reduced competition in refining, giving the remaining companies more power to drive prices higher when fuel supplies tighten.
Fewer Competitors, Less Room to Respond
The Iran war disrupted global fuel supplies, putting pressure on an industry already shaped by years of mergers and refinery closures. With fewer competitors and less refining capacity, the industry has less ability to increase production during supply disruptions.
Marathon Petroleum bought Andeavor in 2018, combining two major refining companies. Marathon said the deal would make it the country’s largest refiner, with the capacity to process more than 3 million barrels of crude oil a day. Two companies that once made separate business decisions became one.
The industry has also lost refining capacity. U.S. capacity fell by more than 250,000 barrels a day in 2025. Mergers leave fewer independent competitors, while closures have reduced the industry’s overall fuel production.
That matters when fuel supplies are disrupted. Increasing fuel production can lower prices, but refineries already running near capacity cannot quickly increase production. Building new refineries or expanding existing ones takes time.
Government studies have also found that some petroleum mergers led to higher wholesale gasoline prices.
Federal regulators should investigate whether refinery mergers and closures are contributing to higher fuel prices, particularly during supply disruptions.
Farmers Have Seen This Before
This pattern is all too familiar to farmers: They pay more for essential inputs while the companies supplying them pad their wallets. Farm Action’s report found that during the 2021 fertilizer price spike—before Russia’s full-scale invasion of Ukraine—Nutrien’s nitrogen production costs rose 51%, while its gross manufacturing margin rose 680% in the third-quarter comparison. The company’s manufacturing gains grew far faster than its production costs. This shows how market concentration can give suppliers more power to raise prices, leaving farmers to shoulder higher costs.
Farmers Need Fair Fuel Markets
Temporary tax relief may marginally help farmers manage immediate fuel bills, but it won’t add refinery capacity or restore competition. Federal antitrust enforcement agencies should examine whether refinery mergers have contributed to higher prices or worsened price spikes. They should also scrutinize regional fuel shortages, refinery closures, and business practices that unfairly restrict competition.
Farmers depend on fair markets not just for fuel, but also for fertilizer, seed, equipment, and the crops and livestock they sell. When a crisis hits, farmers shouldn’t be left paying more while powerful companies reap the gains.
Farmers should be able to make a living producing food without every crisis becoming another corporate windfall.
