Diesel Fuel Crisis Looms Large – Another Inflation Scare

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There are many reasons for the looming diesel fuel crisis which is global and a problem for the United States. It is particularly bad on the East Coast.

One of the U.S.’s largest truck stops. – Love’s – said Wednesday it is closely watching its diesel fuel supplies in the Northeast.

The industry-wide shortages are growing.

Diesel was always cheaper than gasoline but in NY, it is now $2 more per gallon.

“Love’s monitoring the fluid situation on the East Coast, we have experienced minimal outages during low traffic hours,” Oklahoma-based Love’s Travel Stops said in an emailed statement to Morning Star. “The company has no plans to restrict purchases of diesel.”

INVENTORIES ARE LOW

Inventories of diesel fuel, which in the U.S. is mostly used by truckers, have been on the decline since the pandemic began. It is getting worse due to reduced refining capacity, robust demand for trucker fuel during the pandemic, and a recent rise in diesel exports.

The supply chain issues cause problems.

Inventories of distillates – which is mainly diesel – are down 25%.

“The East coast is the worst. The EIA said distillate fuel oil inventories in the so-called PADD 1 district that covers the Northeastern states fell by 1.1 million barrels last week to just 21 million barrels, the lowest ever recorded in data going back to 1990.

REFINEMENT PROBLEMS

“The problem on the East Coast is refining capacity, not so much the supply of oil,” says Peter Meyer with S&P Global Commodity Insights. “East Coast capacity has been cut in half from 1.6 million barrels per day to 800,000 barrels per day over the past 10 years as half of the refineries in the east have shuttered.  Lower production capacities and higher post pandemic demand have caused this squeeze in the eastern U.S.”

Truck stops are warning truckers of the coming potential for a crisis.

Matt Smith, the lead oil analyst at commodity tanker-tracking firm Kpler, also said the East Coast problem is reduced refining.

“U.S. refinery runs now are at 15.7 million barrels a day compared to the 2015-19 average of 16.4 million, Mr. Smith said. “Refiners have just not been producing as much and have not rebounded to pre-pandemic levels.”

Refineries closing is a problem and it was a foreseeable one. It began in 2020, and Biden is doing everything in his power to see them stay that way.

SANCTIONS AND EXPORTS

The problem, in general, is also the result of sanctions against Russia.

“Diesel supply is short all over the world due to sanctions against Russian oil and much higher post-pandemic demand as supply restocking takes place,” says Peter Meyer.

Still another reason for the drop in U.S. diesel fuel inventories is exports of the fuel have risen sharply in recent months despite the low stockpiles.

FARMERS TOO

Some farmers are now even reporting farm diesel prices are higher than on-road diesel, which is typically not the case.

Record prices are one thing, but getting your hands on enough diesel may be the next issue for farmers.

There is one other thing. We have a fool for a President who is ruining the world. His policies either manufacture problems or make them worse.


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mostly grey
mostly grey
15 days ago

And with the fuel shortage raging throughout the world, every country seemingly sanctioning Russian fuel, can you guess who is going to be laughing when every countries economy goes South in a hurry cause they have no fuel to power their economy with? As long as the present cabal of idiots are running the worlds countries, things are going to get worse before they get much worse. Count on it!

Tim Kuehl
Tim Kuehl
15 days ago

This story is about diesel fuel shortages and sky high prices which are primary causes of inflation at all levels. Gasoline prices have doubled since Biden seized office. There is even a serious baby food shortage. And what is being done about any of it? The government is continuing to spend trillions of dollars we don’t have giving to people who refuse to work, people in our country illegally, foreign governments, and payola to their cronies and supporters. It isn’t that the system is broken, it’s those running it and currently it is Puppet Biden, his puppeteers pulling his strings and the Congress led by Pelosi and Schumer, all far left Democrats. Biden laughs about the inflation because every thing is provided for him at taxpayers’ expense. In March the Democrat controlled Congress gave themselves 20%+ raise to cope with inflation and last week gave their staffs a 21% raise to cope with inflation. Did you get a raise? I doubt it unless you consider the raising of politicians’ and bureaucrats’ collective middle finger towards you as a raise. And, no, I’m not leaving Republicans blameless either because they too, and especially the Republican leadership, share a lot of blame. We’re in dangerous times here with anarchists running freely on the streets of America that the DOJ led by Merrick Garland and local Democrat DAs are not interested in prosecuting. I have heard several people say they are surprised citizens with pitch forks aren’t storming OUR White House and OUR Capital Building with tar and feathers which our foreign enemies are just waiting for.

GuvGeek
GuvGeek
15 days ago

I guess the Liberals in the North East need to build a lot more Windmills. Just wait until next winter comes. People saw high prices last winter, I expect shortages this winter.