The Napa Valley’s 2026 harvest is nearly in the books, but for Mike Nuñez and others, the season’s final tally has a costly new line item — diesel fuel.
“We’re just seeing it shred off our profit margins,” said Nuñez, managing partner and director of vineyard operations at Nuñez Vineyard Management.
The average price of a gallon of diesel in Napa County is $8.61, according to AAA, up from $8.05 a month ago and $5.22 a year ago. California’s diesel prices are the highest in the nation, roughly $2 a gallon above the national average.
For perspective, a 2020 UC Davis study of the cost of farming Cabernet Sauvignon in Napa County assumed growers paid $2.95 a gallon for diesel delivered to the farm.
Nuñez, who was born and raised in St. Helena, started his vineyard management company in 2010. In addition to farming vineyards for clients, the company operates diesel trucks that haul fruit from vineyards to wineries and move equipment from site to site.
Tractors working in the vines can run on tax-exempt dyed diesel, Nuñez said, but the moment a vehicle goes onto a public road, it must burn taxed fuel. That’s most of what a vineyard management company does at harvest.
Passing the cost along isn’t simple.
The wine industry is in a downturn, with wineries cutting back on grape purchases and some growers left with fruit they can’t sell. That leaves many vineyard owners with little room to absorb another expense, and the companies that farm for them have little leverage to ask.
“Clients aren’t willing to pay more,” Nuñez said. “There are some clients we could do an adjustment with to cover the increase in diesel prices. But there are others who can’t afford it. It all depends on what the wineries are paying them for the grapes.”
Some growers are already renegotiating contracts with wineries because they can’t sell their fruit, he said.
“I feel like we have pretty good relationships with our clients,” he said. “This price increase didn’t do us any favors.”
Diesel is just the latest cost to climb. Nuñez said prices for steel, parts and general vineyard operations have all gone up, as vendors raise rates in response to tariffs. Some of his company’s equipment is made in Italy and Germany, and last year his mechanics raised their rates because of the cost of parts.
“When it rains, it pours,” he said.
Peter Rumble, chief executive of the Napa County Farm Bureau, said the squeeze reaches well beyond the wine industry to agriculture across California. Some more remote parts of the state are paying $10 a gallon, he said.
“It’s a killer,” Rumble said.
Many farmers and contractors work under set contracts for deliveries and other services, he explained, and those contracts don’t account for a jump in fuel costs.
“Folks are either not making any profit or working on passing on the costs to their clients,” he said. “It’s putting people in a really difficult situation.”
Growers who do their own farming aren’t spared either.
“You’re still impacted by this because an input like diesel just has to be used,” Rumble said.
The price spike has been driven in part by disrupted shipping through the Strait of Hormuz amid the U.S.-Israeli war with Iran, which began in February. The waterway normally carries about a fifth of the world’s petroleum. Ukrainian strikes on Russian refineries amid those countries’ four-year-old war have added further strain on global fuel supplies.
On Oct. 5, President Trump signed an executive order directing the Treasury Department to defer certain federal diesel excise taxes through Dec. 31. The order also directs the Internal Revenue Service to waive federal penalties for using dyed diesel on highways during that period.
Rumble said the order offers meaningful relief in some states, but less so in California. The state still levies its own taxes on diesel and doesn’t allow dyed diesel on public roads, so it isn’t aligned with the federal order.
If California wanted to provide relief, Rumble said, it could allow farm diesel on public roads and remove some of its additional diesel taxes.
For Nuñez, the timing stings regardless.
“Harvest is pretty much wrapped up, so the executive order doesn’t help much,” he said. “They always come up with these things at the 11th hour.”
Rumble said the pattern is familiar to farmers.
“It’s just one thing after another,” he said. “People figure out how to get everything done, and then they get hit with another thing.”
You can reach reporter Keith Cousins at 707-256-2212 or keith.cousins@napanews.com.
