Powerful extragalactic jets dissipate their kinetic energy far from the central black hole.

Accretion onto the supermassive black hole in some active galactic nuclei (AGN) drives relativistic jets of plasma, which dissipate a significant fraction of their kinetic energy into gamma-ray radiation. The location of energy dissipation in powerful extragalactic jets is currently unknown, with implications for particle acceleration, jet formation, jet collimation, and energy dissipation. Previous studies have been unable to constrain the location between possibilities ranging from the sub-parsec-scale broad-line region to the parsec-scale molecular torus, and beyond. Here we show using a simple diagnostic that the more distant molecular torus is the dominant location for powerful jets. This diagnostic, called the seed factor, is dependent only on observable quantities, and is unique to the seed photon population at the location of gamma-ray emission. Using 62 multiwavelength, quasi-simultaneous spectral energy distributions of gamma-ray quasars, we find a seed factor distribution which peaks at a value corresponding to the molecular torus, demonstrating that energy dissipation occurs  ~1 parsec from the black hole (or  ~104 Schwarzchild radii for a 109M⊙ black hole).