An acute shortage of diesel fuel in the U.S. is threatening to keep inflation and heating bills high in the country through the winter, as prices are expected to continue surging.
New government data released on Wednesday show that diesel supplies are "unacceptably low," as National Economic Council Director Brian Deese told Bloomberg TV on Wednesday. According to the Energy Information Administration, the U.S. has now 25 days left of diesel supply, its lowest level since 2008.
Deese said that "all options are on the table" to replenish U.S. supplies, which have been drained by the impact the Russian invasion of Ukraine has had on global energy supplies and imports.
In this photo, semi-trucks pull into TA Travel Center to gas up in Jessup, Maryland, May 2, 2022. The U.S. is facing a diesel shortage that could increase the price of the fuel this winter if inventory isn't replenished soon.JIM WATSON/AFP VIA GETTY IMAGES
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Imports from Russia have been banned following the Russian invasion of Ukraine on February 24, contributing to the current supply crunch in which refineries' seasonal maintenance also played a big part.
While supplies of diesel started dwindling in the U.S., demand is currently at its highest point in two years. And as winter approaches, demand for diesel to heat homes is about to rise, likely causing an increase in prices.
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The immediate consequences of this shortage will be higher prices. "For now," according to De Haan.
At the moment, according to AAA data, diesel prices are some 50 percent higher than they were this time of the year in 2021, at $5.324 a gallon.
"That and refinery outages in recent weeks haven't helped, in addition to strong demand from Europe as they attempt to cut off Russian supplies."
The U.S. is set to receive at least two ships carrying a total of some 90,000 metric tons of diesel and jet fuel that have been diverted from their original destinations in Europe to the East Coast, as reported by Reuters on October 14. The diesel is arriving from the United Arab Emirates.
In response to the diesel shortage, the Biden administration has been considering limiting fuel exports to lower consumer prices. De Haan thinks that there's "not much [Biden] personally can do."
"Perhaps waiving the Jones Act, which would widen the fleet of available vessels to ship diesel from Gulf Coast refiners to the Northeast, or raise incentives for refiners to repair/restore any idle capacity," he said, "but they have plenty of incentive right now with diesel commanding high selling prices."
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New government data released on Wednesday show that diesel supplies are "unacceptably low," as National Economic Council Director Brian Deese told Bloomberg TV on Wednesday. According to the Energy Information Administration, the U.S. has now 25 days left of diesel supply, its lowest level since 2008.
Deese said that "all options are on the table" to replenish U.S. supplies, which have been drained by the impact the Russian invasion of Ukraine has had on global energy supplies and imports.
In this photo, semi-trucks pull into TA Travel Center to gas up in Jessup, Maryland, May 2, 2022. The U.S. is facing a diesel shortage that could increase the price of the fuel this winter if inventory isn't replenished soon.JIM WATSON/AFP VIA GETTY IMAGES
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Why Is Diesel So Expensive?
The price of diesel in the U.S. has been surging "due to inventories at very low levels and limited ability to quickly improve supply," Patrick De Haan, GasBuddy's head of petroleum analysis oil and refined products analyst, told Newsweek.Imports from Russia have been banned following the Russian invasion of Ukraine on February 24, contributing to the current supply crunch in which refineries' seasonal maintenance also played a big part.
While supplies of diesel started dwindling in the U.S., demand is currently at its highest point in two years. And as winter approaches, demand for diesel to heat homes is about to rise, likely causing an increase in prices.
NEWSWEEK SUBSCRIPTION OFFERS >
The immediate consequences of this shortage will be higher prices. "For now," according to De Haan.
At the moment, according to AAA data, diesel prices are some 50 percent higher than they were this time of the year in 2021, at $5.324 a gallon.
Are We Running Out Of Diesel?
"I wouldn't say 'running out,' but with high demand as winter approaches for heating oil—virtually the same as diesel—and with one million barrels less refining capacity than we had back in 2019, we're basically doing more with less, and strong demand has chiseled away at supplies," said De Haan."That and refinery outages in recent weeks haven't helped, in addition to strong demand from Europe as they attempt to cut off Russian supplies."
The U.S. is set to receive at least two ships carrying a total of some 90,000 metric tons of diesel and jet fuel that have been diverted from their original destinations in Europe to the East Coast, as reported by Reuters on October 14. The diesel is arriving from the United Arab Emirates.
In response to the diesel shortage, the Biden administration has been considering limiting fuel exports to lower consumer prices. De Haan thinks that there's "not much [Biden] personally can do."
"Perhaps waiving the Jones Act, which would widen the fleet of available vessels to ship diesel from Gulf Coast refiners to the Northeast, or raise incentives for refiners to repair/restore any idle capacity," he said, "but they have plenty of incentive right now with diesel commanding high selling prices."
U.S. only has just days of diesel left before supply runs out
Diesel fuel is now 50 percent more expensive than in this same period last year and prices are expected to continue surging.
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