From the editors: This is part 2 of a series on America's Broken Promise by Joe Maxwell. Joe Maxwell is the President of Farm Action Fund. In this essay he breaks down the fundamental problems with the modern oil and diesel economy and why Americans cannot afford gas.
When diesel climbed above $6 a gallon this year, I thought about the people I know who don't have the option of simply buying less of it. A farmer still has to put fuel in the tractor. A trucker still has to haul the load. A construction worker may drive a diesel pickup 40 miles to the jobsite.1
And all of us pay the freight. Diesel is embedded in the cost of planting our crops, harvesting our food, hauling it to the processor, stocking the grocery store, and delivering nearly everything else we buy.
There was a legitimate reason energy prices exploded in 2026. War with Iran disrupted global energy markets. Later, Russia, the world's second-largest diesel exporter, restricted diesel exports.2
But a supply shock is the beginning of the story, not the end. The more important question is what happened next.
Extraordinary profit is supposed to summon competition
We have been conditioned to think there are only two ways to look at extraordinary corporate profits. One side says companies have a right to charge whatever the market will bear and questioning their profits is anti-business. The other says government should step in and control prices.
Capitalism was never supposed to depend on corporations putting the public interest ahead of their own interests or those of their shareholders.
I don't believe either answer reflects how capitalism is supposed to work.
Profit has an important purpose. When something becomes scarce, its price rises. Higher prices create higher profits. Those profits send a signal to entrepreneurs and investors: There is money to be made here. Someone expands production. Someone else enters the business. Supply increases. Businesses compete for customers. Prices and profits are pressured back down.
Competition is a restraint on profit. That's the discipline built into capitalism.
Capitalism was never supposed to depend on corporations putting the public interest ahead of their own interests or those of their shareholders. It was supposed to depend on competition making corporate self-interest serve the public interest. A business has the right to pursue a profit. Competition gives someone else the opportunity to take that profit away.
Government has a responsibility in that system too, not to set prices or determine profits, but to enforce the rules that keep markets open and competitive.
Then 2026 stress-tested the system
When the Iran war sent oil prices soaring, the federal government took an extraordinary step. On March 11, the United States announced that it would make 172 million barrels of crude oil from the Strategic Petroleum Reserve available as part of a coordinated 400-million-barrel action by International Energy Agency countries. The oil was provided through an exchange, meaning participating companies must eventually return the oil plus additional barrels.3
It was a massive deployment of a publicly owned national asset, and crude oil prices did fall dramatically.
But crude oil isn't diesel. You can't put a barrel of crude into my tractor. Before that oil can become diesel, gasoline, or jet fuel, it has to pass through a refinery. That is where another constraint became important.
By June, refineries located in the United States were operating at about 96.5 percent of capacity. When a system is running that close to its physical limits, there isn't much additional production available simply because prices rise. The government could release more crude oil from the Strategic Petroleum Reserve, but America had no strategic reserve of refining capacity.4
Then Russia restricted diesel exports. Foreign buyers needed replacement supplies and increasingly competed for diesel produced by refineries located here. There is nothing inherently wrong with that. A privately controlled refinery company is not a public utility. It has an incentive to sell its product where it can earn the greatest return. That's how markets work.5
business doesn't establish the rules under which competition operates. Government does.
But it raises a bigger question: Did we still have enough refining capacity—and enough competitors—to answer that demand without leaving people in the U.S. competing for fuel from a system already running near its limits?
The capacity—and the competition—had already changed
The evidence does not show that refinery companies responded to the 2026 crisis by deliberately idling large amounts of available capacity. Quite the opposite. Refineries located in the United States were running extraordinarily hard.6
But the bottleneck in refining that existed when the crisis arrived wasn't simply an accident. Over preceding years, refinery companies had closed, merged, idled, or converted facilities. Some decisions followed the collapse in fuel demand during COVID. Others reflected changing economics. Those were business decisions.7
But business doesn't establish the rules under which competition operates. Government does.
Beginning in the late 1970s and 1980s, American antitrust policy increasingly embraced the consumer-welfare philosophy associated with Robert Bork's The Antitrust Paradox. Merger enforcement increasingly emphasized prices, output, and efficiencies rather than concentration itself and the preservation of independent competitors.8
The petroleum industry then went through decades of consolidation. Government did not order companies to merge. Businesses pursued their economic interests. For a company, acquiring a competitor can be more attractive than fighting it for customers, market share, and profits. A merger can create efficiencies and lower costs, but it can also eliminate a rival, increase market share, and give the combined company greater power over prices and the terms on which it does business. But government allowed those mergers to occur.
Joe Maxwell
Read Part 1 of America's Broken Promise
The Government Accountability Office later examined the petroleum merger wave of the 1990s. More than 2,600 mergers occurred throughout the industry from 1991 through 2000. GAO found that concentration increased particularly in refining and marketing and that six of eight mergers it modeled generally resulted in higher wholesale gasoline prices.9
By the time the 2026 shock arrived, two different things had happened: closures, mergers, and conversions had removed physical capacity; consolidation had removed independent competitors.
Marathon Petroleum's Refining & Marketing adjusted EBITDA rose from approximately $1.4 billion in the first quarter of 2026 to $6.7 billion in the second
Even though a refinery can remain physically open after a merger. Its tanks, pipes, workers, and processing equipment don't disappear. But something else does: the independent company that once decided for itself how much to produce, where to invest, whether to expand, and how aggressively to compete.
The market could send the signal instantly. In 2026, extraordinary refining profits were that signal. They were telling investors and competitors: There is money to be made here. Produce more. Expand. Enter this market. Compete for these customers.
But the market could not instantly recreate the capacity and independent competition that had disappeared over decades.
Follow the money
The financial statements show just how powerful that signal and extraordinary profits became. Marathon Petroleum's Refining & Marketing adjusted EBITDA rose from approximately $1.4 billion in the first quarter of 2026 to $6.7 billion in the second. Valero's refining operating income increased from approximately $1.8 billion to $4.5 billion. Phillips 66's refining pre-tax income jumped from approximately $208 million to $3.1 billion, while its realized refining margin increased from $10.11 to $24.08 per barrel.10
Those aren't identical accounting measures, so they shouldn't simply be added together. But the direction is unmistakable: refining capacity had become extraordinarily valuable.
Those profits do not prove illegal conduct, but it proves what happens to a country that allows excessive concentration in a market.
The companies invested some of the money in their businesses. They maintained facilities, improved yields, expanded some operations, and paid down debt. They also returned billions of dollars to shareholders. The refinery companies were responding to the incentives in front of them.11 They were reaping the benefits of a market without competition.
Capitalism asks the question: Where was the competitor trying to take those extraordinary profits away?
Why didn't somebody just build another refinery?
A new competitor needs billions of dollars. It needs land, permits, crude supplies, pipelines or marine access, storage, specialized engineering, and years to construct a major refinery. And after making that enormous investment, it has to hope today's extraordinary refining margin hasn't disappeared before the facility ever opens.
Somewhere along the way, America began treating almost any challenge to concentrated corporate power or any antitrust rule as an attack on capitalism claiming it as socialism or communism. We have that backwards.
Existing companies can expand their facilities and squeeze additional production from their plants. That matters. More supply can put downward pressure on prices. But more capacity controlled by the same companies is not necessarily more competition.
Consider Marathon Petroleum's 2018 acquisition of Andeavor. The transaction combined two major refining companies into a system with more than 3 million barrels per day of crude capacity across 16 refineries. Before the merger, Marathon and Andeavor independently made decisions about investment, maintenance, expansion, and marketing. Afterward, those decisions were made inside one company.12
The refineries didn't necessarily disappear. An independent competitor did.
That doesn't prove this merger caused today's diesel prices. Not every merger harms competition, and big isn't automatically bad. The problem comes when merger after merger leaves fewer independent businesses able to respond when extraordinary profits appear.
For decades, government increasingly trusted that consumer welfare could be protected even as industries became more concentrated. The federal government's 2023 merger-enforcement guidelines renewed attention to market concentration, trends toward consolidation, and the loss of competition between merging firms. But by then, much of the consolidation had already occurred.13
The experience at the diesel pump raises a fundamental question: What happens when the competitors our government allowed to disappear are the very competitors we need when the market comes under stress?
Antitrust isn't anti-capitalist
Somewhere along the way, America began treating almost any challenge to concentrated corporate power or any antitrust rule as an attack on capitalism claiming it as socialism or communism. We have that backwards.
The capitalist answer to extraordinary profits isn't supposed to be government price controls. It is competition.
But competition serves another purpose. It disciplines the person or corporation you're saying no to.
Government shouldn't decide what Marathon, Valero, or Phillips 66 is allowed to earn. Government shouldn't have to tell a privately controlled refinery company to put a Missouri farmer ahead of its shareholders.
Government's responsibility is to maintain a market in which someone else has a realistic opportunity to compete for that business.
For too long, government failed to give that responsibility sufficient weight as industry after industry consolidated. We are paying the price for that failure. Antitrust laws are not contrary to capitalism. They are among the rules that make capitalism possible.
Price controls ask government to determine the appropriate price. Antitrust asks government to protect the competitive process and let competition determine the price.
The promise
Back at the diesel pump, farmers don't need Washington to guarantee them $2 diesel. And they shouldn't have to depend on a multinational corporation, out of the goodness of their hearts, voluntarily sacrificing profits to help them. They need enough competition that when prices and profits rise, companies have an incentive to undercut one another—to lower prices, capture market share, and force their competitors to respond. When there are too few competitors, companies don't have to agree to keep prices high; they may simply have less reason to cut prices because there are fewer rivals threatening to take their customers. Farmers need a market that works.
The answer isn't less capitalism. It is restoring the competition that makes capitalism work.
In Part I, I argued that competition gives ordinary people one of the most important freedoms in a market economy: the freedom to say no. No to a bad price. No to a bad contract. No to a company that isn't serving you.
But competition serves another purpose. It disciplines the person or corporation you're saying no to.
Capitalism gives a business the freedom to pursue a profit. Competition gives everyone else the freedom to take that profit away. When that second freedom disappears, capitalism begins losing the mechanism that disciplines the first and moves toward a monopoly or oligopoly market.
The answer isn't less capitalism. It is restoring the competition that makes capitalism work.
But there is one more side to America's broken promise. So far, we have looked at competition through what Americans buy—from the food on our tables to the fuel that moves our economy. Every working American also enters the marketplace as a seller. We sell something extraordinarily valuable: our labor.
And when employers no longer have to compete vigorously for that either, the consequences reach beyond what we pay at the grocery store or diesel pump. They begin determining whether working Americans share in the prosperity they help create—and whether working hard still provides a realistic path to owning a home and building an independent life.
That is where America's broken promise takes us next.
© 2026 Joe Maxwell. All rights reserved.
- Bureau of Transportation Statistics. (2026, October 6). Motor fuel prices – September 2026. U.S. Department of Transportation. https://www.bts.gov/newsroom/motor-fuel-prices-september-2026-0
- Reuters. (2026, July 11). Russia’s diesel export ban deepens global supply crunch. https://www.reuters.com/business/energy/russias-diesel-export-ban-deepens-global-supply-crunch-2026-07-11/© 2026 Joe Maxwell. All rights reserved.
- U.S. Department of Energy. (2026, March 11). United States to release 172 million barrels of oil from the Strategic Petroleum Reserve. https://www.energy.gov/articles/united-states-release-172-million-barrels-oil-strategic-petroleum-reserve
- U.S. Energy Information Administration. (2026). Refinery operable utilization rate. https://www.eia.gov/dnav/pet/pet_pnp_unc_a_(na)_yup_pct_m.htm
- U.S. Energy Information Administration. (2026, August). Petroleum markets responded to disruptions in the Middle East in the second quarter. https://www.eia.gov/Todayinenergy/detail.php?id=67865
- U.S. Energy Information Administration. (2026, August). Petroleum markets responded to disruptions in the Middle East in the second quarter. EIA reported that refineries processed the most crude oil in the second quarter since 2019, when refining capacity was 4% higher. https://www.eia.gov/Todayinenergy/detail.php?id=67865© 2026 Joe Maxwell. All rights reserved.
- U.S. Energy Information Administration. (2021, July 8). Refinery closures decreased U.S. refinery capacity during 2020; U.S. Energy Information Administration. (2023, May 2). Beaumont refinery expansion boosts Gulf Coast petroleum refining capacity. https://www.eia.gov/todayinenergy/detail.php?id=48636 ; https://www.eia.gov/todayinenergy/detail.php?id=56360
- Federal Trade Commission. (1996). The evolution of U.S. merger law; Federal Trade Commission. (2001). The essential stability of merger policy in the United States; U.S. Department of Justice. (2022, April 21). Assistant Attorney General Jonathan Kanter delivers remarks at New York City Bar Association’s Milton Handler Lecture. https://www.ftc.gov/news-events/news/speeches/evolution-us-merger-law ; https://www.ftc.gov/news-events/news/speeches/essential-stability-merger-policy-united-states ; https://www.justice.gov/archives/opa/speech/assistant-attorney-general-jonathan-kanter-delivers-remarks-new-york-city-bar-association
- U.S. Government Accountability Office. (2004). Energy markets: Effects of mergers and market concentration in the U.S. petroleum industry (GAO-04-96). https://www.gao.gov/products/gao-04-96© 2026 Joe Maxwell. All rights reserved.
- Marathon Petroleum Corporation. (2026, August 4). Marathon Petroleum Corp. reports second-quarter 2026 results; Valero Energy Corporation. (2026, July 30). Valero Energy reports second quarter 2026 results; Phillips 66. (2026, August 5). Phillips 66 delivers strong second-quarter results and operating performance. https://ir.marathonpetroleum.com/investor/news-releases/news-details/2026/Marathon-Petroleum-Corp--Reports-Second-Quarter-2026-Results/default.aspx ; https://investorvalero.com/news/news-details/2026/Valero-Energy-Reports-Second-Quarter-2026-Results/default.aspx ; https://investor.phillips66.com/financial-information/news-releases/news-release-details/2026/Phillips-66-Delivers-Strong-Second-Quarter-Results-and-Operating-Performance/default.aspx
- Marathon Petroleum Corporation. (2026, August 4). Marathon Petroleum Corp. reports second-quarter 2026 results; Valero Energy Corporation. (2026, July 30). Valero Energy reports second quarter 2026 results; Phillips 66. (2026, August 5). Phillips 66 delivers strong second-quarter results and operating performance. The companies reported capital investment, debt reduction, dividends, and/or share repurchases during the quarter. URLs as cited in note 10.© 2026 Joe Maxwell. All rights reserved.
- Marathon Petroleum Corporation. (2018, October 1). Marathon Petroleum Corp. announces successful completion of Andeavor combination, creating the leading U.S. refining, midstream and marketing company. https://ir.marathonpetroleum.com/investor/news-releases/news-details/2018/Marathon-Petroleum-Corp-Announces-Successful-Completion-of-Andeavor-Combination-Creating-the-Leading-US-Refining-Midstream-and-Marketing-Company/default.aspx
- U.S. Department of Justice & Federal Trade Commission. (2023, December 18). 2023 Merger Guidelines. The guidelines address market concentration, elimination of competition between merging firms, and trends toward consolidation; DOJ describes them as nonbinding. https://www.justice.gov/atr/2023-merger-guidelines
© 2026 Joe Maxwell. All rights reserved.
