Diesel Is Up 50% in Weeks. Here Are 2 Stocks Quietly Benefiting From the Spike.

If you think gas prices have spiked over the past couple of weeks due to the war in Iran, that's nothing compared to what's happened with diesel fuel.

In January, the average cost of a gallon of diesel fuel at the pump was $3.365. Now, it's $5.382, a jump of 59% in just a few weeks. When diesel prices climb, the main companies that benefit aren't oil drillers but independent refiners.

Valero Energy (NYSE: VLO) and Phillips 66 (NYSE: PSX) are refiners that make money from the crack spread -- the difference between the price of a barrel of crude oil and the price of refined products, such as diesel or gasoline. Here's why I like each of these energy stocks, and not just in the short term.

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Valero is far from running on empty

The company's shares are up 39% this year and more than 105% over the past year. Even with its shares not far off their all-time high of $254.32, the stock is priced at around 10.8 times forward earnings, in line with its competitors.

Valero owns 15 petroleum refineries in the U.S., Canada, and the U.K., with a combined throughput capacity of approximately 3.2 million barrels per day. The company's refinery utilization rates in 2025 were above 96%, higher than industry averages that have been wavering between 89% and 94.7% since the start of the year.

Even before the current run-up in diesel prices, the company was doing well financially. It reported 2025 adjusted net income per share of $10.61, up 25%.

The company's stock didn't even take much of a hit when an explosion occurred at its Port Arthur, Texas, refinery on March 23. The company restarted operations just two days after the explosion.

Valero, the largest producer of renewable diesel in North America, benefits from government mandates that promote renewable fuels. Renewable diesel is produced from fats, used cooking oils, and corn oil, and is chemically identical to petroleum diesel but with a lower carbon intensity. Valero also has 12 plants that can produce 1.6 billion gallons of ethanol a year, a renewable fuel mostly made from cornstarch in the U.S.

The company is shareholder-friendly

Valero raised its dividend by 6.2% this year to $1.20 per quarterly share. It has paid a dividend for 37 consecutive years and has raised it for the past three years. The yield is 2.1% at its current share price, above the S&P 500 average dividend yield of 1.1%.

Over the past decade, Valero has increased its dividend by 100%. Last year, it paid out $1.4 billion in dividends but repurchased $2.6 billion in shares, helping keep its stock price higher.

Phillips has branched out into midstream and renewables

Phillips 66 has spent billions to build a wellhead-to-market natural gas liquids business that provides much more predictable, fee-based income. With major acquisitions such as its 2023 purchase of DCP Midstream and 2025 buyout of EPIC NGL, the company has shifted its revenue mix. Midstream now provides a massive cushion of steady cash flow that isn't as sensitive to the ups and downs of crude oil prices.

It has also converted its San Francisco refinery into one of the world's largest renewable diesel and sustainable aviation fuel (SAF) facilities. This positions it, like Valero, to lead in the energy transition rather than just reacting to it. Through its 50% stake in Chevron Phillips Chemical, which is jointly owned by Phillips 66 and Chevron, the company benefits from the global demand for plastics and chemicals. New world-scale facilities are slated to start up later this year, which should provide a catalyst for increased earnings growth.

Strong finances, solid shareholder returns

Phillips finished 2025 with adjusted EPS of $6.44, up 4.7%. It has increased its dividend for 13 consecutive years, including a 5.8% raise this year to $1.27 per quarterly share. It has raised its dividend by 101% over the past decade. The recent increase puts its yield at around 3.2% at its current share price.

Phillips is also in the midst of a multibillion-dollar share repurchase program and spent $3.1 billion on stock buybacks in 2025.

Both stocks are ready for a renewable future

The companies will benefit from the rising crack spread in diesel prices, and the cycle is likely just getting started as global diesel supplies begin to dry up. When the Strait of Hormuz fully opens up to ship traffic, it will take months for diesel supplies to catch up with pent-up demand.

In the long term, both have hedged their bets by focusing more on renewable fuels and diverse revenue streams, setting themselves up for sustainable success. Their ability to pay above-average dividends and buy back stock also helps buoy their shares, along with investor loyalty.

James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Phillips 66. The Motley Fool has a disclosure policy.