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.
Record gap between gasoline and diesel, but the gap will start to shrink very soon- not by leaps and bounds, but slowly. https://t.co/oFGj8piR3h
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) May 9, 2022
https://twitter.com/gasbuddyguy/status/1523759441396613120?s=21&t=vK7KR5U4jjeB02i-EJ46XA
“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.
https://twitter.com/wallstreetsilv/status/1523329724792991747?s=21&t=fnb1_ZHV3rI6fb2NDf8lrw
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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