Cost of petroleum-based energy — now & next

Published 4:00 am Thursday, October 15, 2026

According to AAA, the national average cost of gas is $4.40 on Oct 2, with the Arkansas average being $3.98. Locally, Newton county’s average was $4.40 and Boone’s $4.18. Last year, the Arkansas average was $2.75 – making the annual increase 45%. According to AAA’s site, Newton and Montgomery counties are the most expensive counties in Arkansas for gas.

Diesel in Arkansas averages $6.01, with it being $3.37 a year ago – an increase of 78%. Nationally, it was $6.37 and was $3.70. In fact, in just the last month, diesel prices increased by almost 13%.

The impact goes well beyond diesel and gas prices. Another critical petroleum-based transportation component is lubrication (motor oil, etc.). CostCo, among others, have already been rationing certain lubricants. According to ILMA (Independent Lubricant Manufacturers Association), there is currently “unprecedented upward pressure on lubricant costs, and conditions are not expected to fully resolve until at least mid-2027.”

This article will attempt to briefly outline the current global state of affairs around petroleum-based fuels, local impacts, and what some experts are projecting for a recovery timeline.

Local impact

The impacts of these elevated prices are not distributed evenly, with some barely commenting about it and others continuing to struggle.

For example, one of the seemingly fortunate ones is the Jasper School District, which locked in fuel prices with MFA for a year, until the end of Sep 2027

The rates contracted were:

• diesel – 26,000 gallons @ $3.9033/gallon (plus tax)

• gasoline – 12,000 gallons @ $3.3433/gallon (plus tax)

• propane – 75,000 gallons @ $1.38/gallon (plus tax)

With the quantity used and even the current prices at the pump, this appears to have been fortunate timing.

When asked about the contract, JSD superintendent Kim Liggett responded, “I am so grateful for our contract with MFA right now. I cannot think of a reason the pricing would change since we are locked in, but I guess nothing is 100% certain. I am talking to our administrators about ways we might conserve, really look at the necessity of each trip, and see whether the cost outweighs the benefit. Also, I’ve already been reviewing bus routes to determine whether we’re using our staffing and buses as effectively as possible.”

Sticking with schools, Harrison School District superintendent Dr. Stewart Pratt shared the situation with his district, “For Harrison Schools, we are preparing for the worst and hoping for the best. We are preparing for increases to continue and greater variances in both diesel and gasoline, and hoping for some long term stabilization in pricing.”

He says their budget is in good shape regarding energy costs, “we would love for all utility costs and fuel costs to lower, however in the past two years our Director of Finance, Shannan

Lovelace and I have placed healthy buffers to account for ‘swings’ in costs of utilities such as electricity, natural gas, and water.”

On July 21, 2026, the Harrison School Board approved bids for gasoline and diesel which are priced at 0.0295 above OPIS pricing costs. Pratt reflects that, “Obviously, OPIS pricing is fluctuating right now with the turmoil in the middle east.” (OPIS is an insight and analysis company that tracks fuel prices)

Additionally, “We have made some minor changes on a few athletic trips to consolidate teams and use less vehicles” though most consolidation results from not having enough bus drivers for trips, however a small factor is the fuel savings.

Pratt remembers, “In the not so far away past the fuel situation became so costly for districts that field trips, activity, and athletic trips were minimized. At Harrison, we have not reached that stage yet, and hopefully never will.”

“As far as utilities energy, my predecessor Dr. Moss did a great job of invoking some efficiency measures to improve lighting, temperature control, and programmable thermostats to become more efficient,” he acknowledged. “We have been adding to those measures to provide a great environment at the lowest cost.”

Regarding farmers and ranchers, Newton County agriculture extension agent, Adam Willis says that “fuel drives everything on a farm. It drives the cost of each input such as fertilizer, cost of grain, cost of materials. Farmers are very much price takers and not price makers. For the most part we are unable to change the prices that are paid for our products.”

As fuel costs increase input costs, and with little control of income from product, operating margins continue to thin.

But, he hasn’t “noticed any additional stress to our local farmers yet as this situation is relatively new.”

Willis says that most hay producers had a lot of carry over due to a milder winter, so he sees many hay producers not cutting any hay that is not of good quality or quantity, instead “they are just waiting till next year hoping the fuel prices will be cheaper.”

Though he encourages farmers to “be really evaluating their operations and trying to save money where they can,” he reassures that, “I don’t think that anyone in our county is currently suffering enough to be considering selling out. Hopefully this is a short lived problem.”

What happened?

The knee-jerk reaction would start on February 28, 2026, with the attack on Iran. There can be no doubt that it has impacted prices, but can it truly account for all of the disruption and price increases?

To help address that question, on September 12, The Solari Report published, “Energy Infrastructure and Trade Route Disruption: Global Timeline.” The 122-page report, available here [https://solari.com/energy-infrastructure-and-trade-route-disruption-global-timeline/], provides a list of incidents affecting the global energy infrastructure since the beginning of 2026. While the report had to stop at a certain point, the incidents have not, neither domestically nor internationally.

In the past month there have been disruptions with transit routes, tankers, oil fields, pipelines, and refineries, allegedly from weather (including the current hurricane Isaias in the gulf, and the Oct 9 8.0-magnitude earthquake in Panama), fires, drones, armed groups, explosions, and simply ‘war’. These disruptions have occurred in the US, Russia, Venezuela, Saudi Arabia, in and around the Strait of Hormuz and the Black Sea.

While the report does not appear to state that all of these events are connected or part of a larger plan, the quantity and timing could be considered suspicious.

Obviously, getting product from the ground and into a car, truck, fertilizer, or any other end-product requires many steps, usually across multiple nation-states. Getting the raw materials like crude oil or natural gas, from where it is extracted from the ground to where it can be processed usually travels by pipeline or tanker.

Not all crude is the same, with some being much lighter and easier to refine, while others are much heavier and more difficult (expensive). Matching the right material with the right refinery complicates the situation when one or the other is taken offline, thereby creating an imbalance in fuel production and flow.

If an oil field, pipeline, refinery, or other critical infrastructure is taken offline, it can take considerably time to recover full utilization.

The middle stage is refining, which, according to most energy and financial analysts, is where the bottleneck and most significant cost increases occur. Oil is cheaper than it was in 2002, yet diesel hit an all-time high. Although several factors affect this difference between refinery input and output, usually referred to as the “crack spread”, the already-limited capacity of refineries is often cited as the primary contributor.

Not only are there seemingly only enough refineries to operate a just-in-time supply system, but those refineries have been operating at peak and above, they are operating for longer periods between maintenance periods and seem to be a frequent target by natural and human forces. Each refinery taken offline for any period of time only adds to the crack-spread and the ultimate cost of fuel and any products needing to be transported.

Okay, that could explain why everyone else is paying more, but not in the US for at least the following reasons:

Yeah, but… the US is a net energy producer and exporter, so we should have abundant resources and fuel. Unfortunately, the US consumer is still competing against everyone else for the same, artificially scarce materials. Couple the competition with geopolitical tension among nation states, people in the US are not buffered from the broader situation. According to the US Energy Information Administration (EIA), in 2025, US refineries produced 1.76 billion barrels, and US consumers used approximately 1.42 billion barrels, though 0.06 billion barrels had to be imported – mostly from Canada.

Yeah, but… the European Union just agreed to release 100 million barrels of oil, including diesel. Alas, that is only a speeding up of an amount previously set back in March. The biggest contributor of the total commitment in March was the US, agreeing to release 177 million barrels.

Yeah, but… Venezuela – most experts agree it’ll take a decade or two to return to peak output. Piper Sandler global energy strategist Jan Stuart thinks that any meaningful recovery in Venezuelan output could take years, with a return to historic production highs potentially requiring a decade or two.

Finally, but… the SPR! The US Strategic Petroleum Reserve is a set of emergency stockpiles of petroleum for use ‘strategically.’ With a low of 270,455,000 barrels in 1970, the amount stored has declined steadily since the peak of 726,617,000 barrels in 2010. With a brief increase in SPR levels from mid-2023 through March 2026. As of Oct 2, 2026, the EIA reports the current SPR level is 282,983,000 – not far above the lowest level recorded by EIA.

We in the US are in the same boat, just perhaps with slightly more comfortable seats.

Historical perspective

Understanding how the US fits in the broader geographic picture is helpful. So, too, is knowing how the current situation compares with the past. So, how expensive is oil, diesel, and gas now compared with times in the past?

InflationData.com tracks the price of gas from 1918 (when it was first introduced) at $0.26/gallon through Aug 2026 at $4.20. Adjusting for inflation (using Aug 2026 dollars), the highest inflation-adjusted average cost for a gallon of gas was $5.71… in 1918. The lowest cost was $2.18 in 1998, with the average over the 108-year span of gasoline in the US being $3.80. In comparison, today’s $4.20/gallon still looks expensive, but not as extreme as the price-at-the-pump would suggest.

Another way to look at the cost is to use a different basis of measure, one this is not a fiat, debt-based currency. The most common alternative is gold. Again, according to InflationData.com, the average number of barrels of oil you could buy with one ounce of gold since 1946 is 16.494 barrels/ounce. On Oct 8, 2026, using WTI crude, which was at $91.13/barrel, and gold at $4,158/oz, currently, one ounce of gold would buy you 45.627 barrels of oil.

Comparatively, the average barrel/oz was 14.1 during the 1970’s and hovered around 12 barrels/oz from 1948 to 1969.

When looked at its cost in gold, oil, and therefore all its products, has rarely been as cheap as it is now.

That doesn’t make the prices any easier to pay with US Dollars, so what are the hopes for a quick recovery?

Projections

When do ‘experts’ think prices will moderate and possibly decline?

The obvious “elephant in the room” that everyone acknowledges is the unknown end-date for the war/not-war/military-action against Iran. Until those hostilities end, moderation is doubted. With President Trump threatening/promising to resume kinetic hostile activity against Iran “after the midterms,” there is little optimism among analysts that it will end in 2026.

Next comes the refinery shortage. There are barely enough functioning refineries globally to slow the drain, but not enough to maintain levels, and definitely not enough to restore any buffers or refill any reserves (outside of what Russia and China are doing and what Trump said the US might do with diesel). Without a restoration of all existing refineries and the addition of more, a return to normalcy is not likely in 2026 and questionable for 2027.

Many nations, those that were fortunate to have reserves, have been tapping into those, which alleviated demand for new products. As reserves reach bottoms, competition will increase for new products until supply, once again, sufficiently outpaces demand.

Additionally, just as the impacts have been disproportionate between diesel and gas, their moderation will likely also be disproportionate… or at least sequential. According to a Goldman Sachs analyst, “The key reason…is that refiners’ switching output from gasoline to diesel is rapidly tightening gasoline markets.” Meaning, the current diesel high prices will transition to higher gas prices as stockpiles dwindle.

Finally, there are simply the basic logistics mentioned at the beginning of this article, namely recovering the full-chain infrastructure, to include drilling, pipelines, refining, storage, shipping, and delivery.

Most economists jokingly say, “the cure for high prices is… high prices.” This points to one of only two market-driven ways prices decline, which is either supply-side or demand-side. If supply is increased, then there is more supply of a product than demand, the price will decline commensurately. Likewise, if supply remains consistent, but demand decreases, then the same decline occurs.

Efforts to increase the supply of crude in places like Venezuela and China, with smaller efforts elsewhere, will eventually help… but those are likely at least five years out. The restoration of existing, and the construction and integration of new, refineries will be the key to restoring ‘old’ normalcy, but the timeline on each is variable (and can change in a moment due to any number of natural or manmade reasons).

With no imminent fix to the supply-side of petroleum-based products, the only other place to look is the demand-side of the equation.

According to noted analyst Karl W. Miller, as reported on the website Sonar21, “the ultimate balancing mechanism is demand destruction: freight deferred, low-margin factories idled, flights cancelled, and poorer importers losing every bidding contest. Miller warns against mistaking that for recovery. Lower consumption caused by rationing through price or credit is not a repaired energy system.”

With all that is happening, even some mainstream economists, investors, and futurists are thinking a demand-destroying event is increasingly likely. Something similar to the 2020+ lockdowns, which drove prices significantly lower due to no travel. The calls are for something even harsher.

But… absent the demand-destroying event, what else is being recommended and implemented?

Mitigation suggestions

One perspective, one that is being followed by a significant number of countries, is from the International Energy Agency (IEA). In a March 2026 report titled, “Sheltering from Oil Shocks –

Measures to reduce impacts on households and businesses,” the IEA shares 10 “demand-side options open to households, businesses and governments to shelter themselves from today’s oil shock and relieve the strains on affordability.”

The list of options includes – working from home where possible, reduce speeds on highways, use public transport, alternate use of private vehicles between days – like fuel rationing by license plates in the 70’s, increasing car sharing and adopting efficient driving practices, avoid air travel where alternative options exist, ans switch to ‘modern’ cooking solutions such as electric.

Other countries have also been rationing fuel, making all schools online/remote teaching, implementing 4-day work weeks, and rationing electricity through rotating power cuts, among others.

Arkansas and Texas governors, followed quickly by President Trump, are temporarily allowing the use of dyed-diesel fuel for on-road agricultural and timber use. This fuel, which is not taxed, is the same as non-dyed, but is generally restricted for off-road agricultural use.

The temporary allowance to increase the level of ethanol content is another tactic being used in the US, though this comes at the cost of higher corn prices for consumption. Many have floated temporarily eliminating gas tax could help, but again, at the expense of the national deficit, which is already around $2.6 trillion for 2026.

The ‘old’ normalcy may never return, but if it does, it will likely not be soon. As one of Jack Nicholson’s characters says, “What if this is as good as it gets?”