East coast inventories of diesel plunged to the lowest seasonal level since government records started more than 30 years ago. The shortage caused a crisis in the diesel market and prices went to an all-time high, according to Javier Blas at Bloomberg. He said it’s reaching crisis levels.
A fuel crisis appears to be in our future.
Diesel is the workhorse of the global economy. It’s used everywhere to keep trucks, tractors, freight trains and factories moving. And its ubiquity means the increase in its price will exacerbate global inflationary pressures.
The oil tanks in New York harbor are nearly empty for reasons both global and local. Around the world, diesel is in short supply as demand has surged well above pre-Covid levels, spurred by a boom in freight. The problem is even worse than those numbers suggest because several refineries are operating well below their typical capacity.
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East coast refining capacity has plunged over the last decade, leaving the region vulnerable to squeezes.
In the past 15 years, the number of refineries on the U.S. East coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.
The cost of a gallon of diesel fuel in the US topped $5.37 a gallon on Monday, up 12 cents since Saturday, easily shattering previous records set in March, Capital.com reports.
“The sad part about this is that while prices may fluctuate, we really do not see an easy answer to the diesel shortage in the short term. This obviously is going to have an impact across the whole economy as the US still runs on diesel,” Phil Flynn, senior market analyst at Price Futures Group, told Capital.com.
Surging prices, a shortage, all of this will fuel inflation. The cost of living in the US is about get very bad. Inflation is catching up with us.
Biden blames Putin but this is his crisis.
COLUMN: The US east coast is running out of fuel, with inventories of diesel dropping to the lowest seasonal level in >30 years.
The oil market is trying to get extra supply, sending diesel refining margins to an all-time high (chart). @bopinion #OOTT https://t.co/1cDYuAKF3c pic.twitter.com/ftQ2ywYkeB
— Javier Blas (@JavierBlas) May 4, 2022
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