Diesel Prices Are Rising Again So Which US Fuel Stocks Merit A Closer Look

Diesel prices in the US are pressing toward record territory again, squeezing transport, farmers and manufacturers while stirring worries about inflation and interest rates. That kind of fuel shock can hurt some stocks and improve conditions for others that are closer to the refining and fuel profit pool. This article breaks down how that story connects to three specific US refiners and fuel producers from the screener and what their exposure to this news might mean for you.

The three stocks covered below are just a starter set from this diesel focused idea. The full screen surfaced 8 more US energy refiners and fuel producers with equally compelling narratives around crack spreads, distillates and downstream diesel exposure. If you want to identify and analyze your own highest conviction candidates in this space, head straight into the US Energy Refiners and Fuel Producers screener.

OPAL Fuels (OPAL)

OPAL Fuels is an energy producer on the refining and fuel producers screener because it supplies renewable natural gas as a truck fuel, offering fleets a way to displace diesel rather than rely on crude based crack spreads. The business is highly US focused and earns most of its roughly US$340 million of revenue from Fuel Station Services at about US$240 million, with RNG Fuel contributing about US$95 million and Renewable Power about US$31 million. With a market cap of roughly US$384 million, OPAL Fuels sits firmly in the smaller cap end of the fuel producer universe.

Investors watching diesel costs squeeze freight operators may find OPAL Fuels interesting because it sells RNG into that pressure point, giving fleets a lower carbon fuel that management believes can keep a cost edge over diesel as engine technology and policy support evolve. The company already generates hundreds of millions in revenue and is expanding RNG production and fueling stations, yet the stock is still priced like a higher risk small cap with a mixed profitability record and reliance on policy incentives. If you want to understand how that trade off between growth projects, regulatory support and funding risk could play out, OPAL Fuels is a story worth looking at more closely.

OPAL Fuels is trying to turn diesel pain into an RNG opportunity, yet the trade off between policy dependence, project build out and small cap risk is easy to miss in the headline story. Get the full picture in the 2 key rewards and 1 important major warning sign

Build your own diesel displacement shortlist

OPAL Fuels and the two other stocks in this article all came from a single screener, but the real advantage comes when you shape the filters yourself. Use our customisable Screener to mix valuation, growth, balance sheet and risk filters that suit you, or lean on the foundations of our curated Investing Ideas.

Calumet (CLMT)

Calumet is one of the clearest diesel linked companies in this screener, because it actually refines fuel and renewable fuel, so its margins are closely tied to crack spreads and distillate pricing. Most of its roughly US$4.6b of revenue comes from Specialty Products and Solutions at about US$3.1b, with Montana/Renewables at about US$1.2b and Performance Brands at about US$341 million, all essentially generated in the US. With a market cap around US$4.2b, Calumet is a mid sized player with direct exposure to diesel and renewable diesel economics.

For investors seeking focused exposure to higher diesel prices and crack spreads, Calumet offers a combination of conventional refining, renewable diesel and a growing sustainable aviation fuel business in Montana/Renewables. These are supported by a larger specialty products segment that management has positioned as a potential cash generator for deleveraging. However, Calumet carries a substantial debt load and relies significantly on regulatory support and consistent policy to maintain renewable margins. That combination of diesel sensitivity, decarbonisation dynamics and balance sheet pressure is where the most important questions for further research arise.

Calumet’s diesel and renewable fuel story appears tightly linked, but its heavy debt and Montana/Renewables ambitions could be masking the real swing factor. Get the full context in the 3 key rewards and 1 important major warning sign

Green Plains (GPRE)

Green Plains is a producer of low carbon fuels that fits this fuel focused screener because its ethanol and renewable corn oil economics are tied to broader fuel pricing rather than crude based diesel alone. Most of its roughly US$1.8b of revenue comes from Ethanol Production at about US$1.7b, with Agribusiness and Energy Services adding about US$170 million once intersegment eliminations of about US$22 million are taken into account. With a market cap of around US$1.1b, Green Plains is a mid sized biofuels company that gives you exposure to fuel markets through a different set of products and policy drivers than traditional refiners.

Investors watching diesel prices surge might find Green Plains interesting because it sells low carbon fuels and coproducts into a world where higher fuel prices can improve biofuel economics, while policy incentives and carbon credits add another layer of potential upside. The company has been working to improve margins and cash generation through higher value products like ultra high protein feed and low carbon corn oil, but earnings still depend heavily on supportive regulation and consistent execution from a relatively new management team. If you want to see how this mix of value signals, policy exposure and carbon monetisation potential fits together, Green Plains is a story worth unpacking in more detail.

Green Plains is working to turn concerns over diesel-driven fuel into a low carbon opportunity, and the real story lies at the intersection of policy incentives, new products and execution. Get the missing context in the 4 key rewards and 2 important warning signs (1 is major!)

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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