There is Refined Products Crisis in the US and It Now Has a New Accelerant that Markets Aren’t Pricing In

There is refined products crisis and it has a hidden accelerant that markets aren’t pricing: data centers are creating massive new structural demand for diesel fuel via generators, at the precise moment US refining capacity is permanently contracting.

The story begins with a simple engineering reality. Data centers cannot tolerate power interruptions. Even milliseconds of downtime costs millions in lost transactions and breached service agreements. Every data center therefore requires backup generators sized to carry 100 percent of the facility’s electrical load during grid failures. These aren’t optional installations but mission critical infrastructure mandated by fire codes, EPA permits, and industry tier certification standards. And overwhelmingly, these generators run on diesel. The Uptime Institute reports that 95 percent of data center backup generators nationally use diesel fuel, rising to 90 percent even in California where environmental regulations strongly discourage it.

The scale of this infrastructure is staggering and growing exponentially. Data centers consumed 183 terawatt hours of electricity in 2024 and projections show that figure reaching 426 terawatt hours by 2030, representing 133 percent growth in just six years. This electrical demand translates directly into diesel generating capacity. Northern Virginia alone operates data centers drawing 4,140 megawatts from the grid. If those facilities experienced an extended power outage and switched to diesel backup, they would consume approximately 5.4 million gallons per day. Converting to standard oil units, that’s 128,000 barrels per day of diesel demand from a single metropolitan region. For context, many refineries produce less total output than Northern Virginia’s data centers would consume in emergency mode.