Hormuz Watch: Heating Oil Is Up 52%. Airfares, 23%. Groceries, 2%.

From the Refiners to the Bill

Part 3 of this series found that refiners are earning a diesel margin about three times its 2025 average, on damage that will take until 2027 to repair in places. Every dollar of that margin is paid by someone further down the line.

At the pump, diesel averaged $6.20 a gallon on Monday, $2.49 more than a year earlier, and regular gasoline $4.35, up $1.23. The Institute on Taxation and Economic Policy estimates that Americans have paid about $110 billion more for gasoline and diesel since prices began rising, about $826 per household so far.

That bill does not land evenly. The people who burn fuel directly pay first. Whether they pay in the end depends on one thing: whether they can pass the cost to a customer.

The Dashboard

Two readings moved since Part 3. The diesel margin rose back to about $102 on Tuesday from $98 on Monday, and physical Brent held about $25 above December futures. The rest are weekly figures: Kpler's next Hormuz reading, Friday's Baltic tanker report and the EIA's retail prices on October 14.

• Crude through Hormuz10.3Mbbl/day76% of prewarWeek to Oct 3, down from 13.5M a week earlier. Next weekly reading after Saturday.Kpler via WSJ
• Refined fuel through Hormuz1.3Mbbl/dayDown 64%Week to Oct 3. Prewar: 3.6M a day.Kpler via WSJ
• Brent, now vs. December$125vs. $101Relief priced inPhysical cargoes vs. December futures, both Oct 6. The gap: about $25.EIA daily prices; futures settlement
• Diesel margin$102per bbl3x 2025Oct 6. A day earlier: $98. 2025 average: $32.EIA daily prices; our calculation
• Supertanker day rate$1.22Mper dayNearly 6x prewarGulf to China benchmark, Oct 2. Next weekly report Friday.Baltic Exchange; Seatrade
• Pump diesel$6.20per galUp 67%National average, Oct 5. Record: $6.53 on Sep 21. Next EIA update Oct 14.EIA weekly retail

Where It Shows Up in Prices

The consumer price index shows where the shock lands. Over the year to August, household fuel oil rose 52%, gasoline 27% and airline fares 23%. All prices together rose 3.4%, and groceries 2.2%.

Groceries barely moved because fuel is a small share of what food costs, even though trucks carry 83% of U.S. farm products, according to the USDA. Here is the math. A truck that gets 6.5 miles to the gallon burns about 77 gallons on a 500-mile haul. At $2.49 a gallon more than last year, that adds about $191 to the load. Spread over 40,000 pounds of groceries, it comes to about half a cent a pound. Produce trucked from California to the East Coast pays closer to 3 cents a pound.

The real damage is in fuel itself and in the services that are mostly fuel. That is where the rest of this part goes.

The Truckers

A truck cost $2.34 a mile to run in 2025, according to the American Transportation Research Institute (ATRI), and fuel was $0.48 of it. The average truck ran about 86,000 miles. At 6.5 to 7 miles a gallon, this year's increase of $2.49 a gallon adds about $30,000 to $33,000 a year per truck.

Large carriers pass most of that on through fuel surcharges, which reset weekly from the government's diesel price. A common formula subtracts a base price of $1.25 a gallon and divides by the truck's miles per gallon. At Monday's price, that comes to about 76 cents a mile, double the 38 cents a year earlier. In the second quarter, Knight-Swift (KNX) collected $331 million in fuel surcharges, more than its $307 million fuel bill. Fuel surcharge revenue rose 82% at J.B. Hunt (JBHT) and 118% at Werner (WERN).

Small carriers absorb more. Surcharges usually lag the pump by one to two weeks, and about 40% of owner-operators cannot negotiate surcharges, according to the OOIDA Foundation, the research arm of the owner-operators' association. At least 16 trucking, delivery and transportation companies entered bankruptcy between late August and September 21, FreightWaves reported, with high diesel prices among the pressures on the industry.

Monday's executive order defers the federal diesel tax of 24.4 cents a gallon through December 31. For a truck burning about 13,000 gallons a year, that defers roughly $800 a quarter, against about $8,000 a quarter in extra fuel.

The railroads are on the other side of this trade. A train moves freight on far less fuel per ton than a truck, and railroads charge fuel surcharges too. Union Pacific said fuel surcharges added 7.5 percentage points to its freight revenue growth in the second quarter, and its domestic intermodal business had a fourth straight record quarter, helped by freight moving off the highway.

The Airlines

U.S. airlines paid an average of $3.72 a gallon for jet fuel in August, 62% more than a year earlier, according to the Bureau of Transportation Statistics. Fuel was 27% to 31% of operating costs at the four largest U.S. airlines in the second quarter, by our calculation from their reports, and none of the four hedges its fuel. Southwest, the last of them to do so, ended its hedging program in 2025.

The four burned 15.6 billion gallons in 2025. Every $1 a gallon adds about $15.6 billion a year to their combined bill. At August's increase of $1.42 a gallon, that is about $22 billion.

They are passing much of it on. Delta (DAL) recovered about 60% of its second-quarter fuel increase through fares, and American (AAL) nearly 50%. United (UAL) said in July it expected to recover 80% to 90% of the increase in the third quarter and all of it by the fourth. Southwest (LUV) spent $889 million more on fuel in the second quarter than a year earlier and cut its planned growth. The tools are fares, fees and fewer flights: airline fares were up 23.4% in August's price index, United and Delta raised checked-bag fees by $10 in April, and United, Delta and Southwest have all cut planned flying.

Delta has a partial hedge of its own. Its Trainer refinery in Pennsylvania lowered its second-quarter fuel cost by 11 cents a gallon, by Delta's figures. Delta reports third-quarter results on Friday. Its July guidance assumed fuel of about $3.15 a gallon for the quarter; Gulf Coast jet fuel averaged $3.40 in July and $3.72 in August.

The Farmers

Farmers cannot add a surcharge to a bushel of corn. They sell at market prices and pay whatever fuel and fertilizer cost.

Harvest is under way: 18% of the corn crop was in by September 27. Dyed farm diesel cost $5.61 a gallon in Illinois in September, against $3.01 a year earlier, according to USDA data compiled by the American Farm Bureau Federation, which puts the added harvest fuel cost at about $8 an acre for corn and $3.56 for soybeans. On a 1,000-acre corn farm, that is about $8,000 for harvest alone.

Fertilizer is the larger bill. Countries that ship through Hormuz supply about 40% of the urea traded worldwide, by North Dakota State University's estimate, and their urea exports fell 83% in April from a year earlier, according to the UN's International Trade Centre. Retail urea peaked in May at $865 a ton, 39% above a year earlier, in DTN's weekly survey, and has since eased to $675, up 9%. Anhydrous ammonia is still up 25%.

The USDA expects farm spending on fuel and oil to rise $4.8 billion this year, or 29%, and on fertilizer $5.3 billion, or 15%. Its forecast for net farm income still comes to $158.4 billion, down 2.6%, with $47.4 billion of it from direct government payments.

The Households Heating With Oil

About 4.8 million U.S. homes heat with oil, 82% of them in the Northeast, according to the EIA. They have no surcharge to collect either.

In August, household fuel oil cost 52% more than a year earlier. The EIA's winter outlook, released Tuesday, expects heating oil prices about 30% above last winter and bills about 21% higher, because it assumes a milder winter in the Northeast. The National Energy Assistance Directors Association puts the average heating oil bill for mid-November to mid-March at nearly $2,300, more than 30% higher. In Maine, a state survey found households paying about $675 more to fill a tank than last year.

Wholesale heating oil in New York Harbor was $4.50 a gallon on Tuesday, and the EIA expects East Coast inventories of diesel and heating oil to stay 20% to 30% below average through the winter.

Help is limited. The Northeast Home Heating Oil Reserve holds 1 million barrels, about 10 days of the region's use, and on September 23 senators from both parties asked the White House to release it. Federal heating aid through LIHEAP was about $4 billion for the fiscal year that ended September 30, and the administration has proposed eliminating it for the new one.

Who Passes It On

Put the groups side by side and the pattern is plain. The cost lands on whoever burns the fuel. Whether it stays there depends on whom they can bill.

What the Market Is Pricing

The stock market has sorted the payers in a similar way. Delta, which owns a refinery, is up 26% since the war began. Southwest is down 15%. The trucking stocks are flat to lower, and Union Pacific is up 4%. The refiners in Part 3 rose 75% to 133% over the same stretch.

For the trucking stocks, most of this year's gain came before the war: Knight-Swift rose 20% between December 31 and February 27 and is up 1% since. The market is treating fuel as a cost these companies can largely pass along, which is what their surcharge revenue shows.

What If a Deal Lands Tomorrow

For the people paying, relief would come in the reverse order of the damage. Crude would fall first, and gasoline with it. Diesel and heating oil would come last, because the refinery repairs and the empty tanks would still be there. The EIA expects East Coast inventories of diesel and heating oil to stay 20% to 30% below average through the winter. And in July, consultant data cited by Valero put jet fuel last in line to recover, after gasoline and diesel.

The surcharge lag would run in reverse, too. When diesel falls, surcharges keep paying for a week or two, so the big carriers would collect a little more on the way down. Farmers have already seen part of the reversal: urea is up 9% from a year earlier, against 39% in May.

The case that the bill stays high for longer runs through Part 3: some refinery repairs reach into 2027, Russia's diesel export ban runs through October 31, and China has not said whether it will approve fuel exports for October.

Our read: the fuel shock is a transfer, and it runs downhill. Refiners and the large carriers with surcharges are on the receiving side or close to even. Airlines are passing on about half and cutting flights to close the rest. Farmers and households heating with oil are paying in full, and they are last in line for relief, because diesel and heating oil are the last fuels to come down.

What the Wealth Engine Scores Say

Before we get to the verdict, here is what the Wealth Engine Pro platform's systematic scoring shows for the four airlines and the largest truckload carrier in this piece.

The platform is lukewarm on all five. None scores above Moderate on Company Strength, and two, American and Knight-Swift, score Weak. The fair values split: United and Delta screen as cheap, Southwest at about fair value and Knight-Swift as overvalued, and American's model value is too far from its price to trust. Only United carries a Bullish outlook; American's is Bearish.

These scores are systematic. They evaluate companies based on reported financials, balance sheet quality, moat characteristics, and valuation models (DCF, peer comparison, earnings power). They measure what a company is today, not what it might become. That is by design: the scoring system is built to keep emotion and forward speculation out of the numbers.

This article is doing something different. It is making an editorial argument about who can pass a cost shock on to customers, which the scores capture only after it shows up in margins and filings.

Both perspectives are real data. The platform tells you the current fundamentals are mixed to weak. The article argues that the ability to pass costs on, more than the fuel price itself, separates the companies that hold up from the ones that do not. Transparent investors use both.

The Bottom Line

The diesel margin in Part 3 is paid for here. Large carriers and railroads bill it onward within a week or two. Airlines are passing about half through fares and closing the rest with fewer flights. The bill stops with farmers, independent truckers and households heating with oil, who have no one to send it to, and it will stay with them longest, because diesel and heating oil are the last prices to fall.

Tomorrow: the exit. Three scenarios, and what each one does to every company in the series.