California diesel prices are continuing their record rally in contrast to cooling markets elsewhere in the US. That’s pushing up the cost to transport goods from the country’s busiest sea ports, as well as growing and moving produce in one of the country’s largest farming regions. 

Diesel pump prices in California have gained for five straight sessions and now stand at $6.652 a gallon, while the national average has fallen for most of the past two weeks, according to data from auto club AAA. The surge in the Golden State is set to continue for the foreseeable future with wholesale prices on the spot market jumping to their highest premium over Nymex futures since 2019.

Considering diesel is the lifeblood of the nation’s transportation system, soaring prices for shippers risk being passed on to American businesses and consumers at a time when overall inflation is running near the highest in decades. Everything from building materials to food to general merchandise will be impacted because of increased costs to move merchandise around the country and operate farm equipment.

California’s production of CARB diesel, which is mandated by the state, has fallen to the lowest level for this time of year since 2004, in part because regulations have incentivized the transition toward renewable alternatives. This has exacerbated price gains of the fuel, already more expensive to make compared with the grade required by federal regulators for the rest of the country. 

Supply could tighten further next month when one of the state’s largest refineries, Chevron Corp.’s Richmond plant in the San Francisco Bay Area, undergoes maintenance that had to be postponed from April due to a labor strike.