Rajan Wilcox
There have been claims that the United States will run out of diesel fuel in 25 days. This is based on data from the United States Energy Information Administration (EIA), which publishes information on the country's fuel stockpiles. While technically true, this claim overlooks the fact that the US is constantly producing and importing diesel fuel. Experts have stated that there are no reported shortages of diesel fuel in the US, although supply is very tight.
| Characteristics | Values |
|---|---|
| Date | October 2022 |
| Number of days of diesel fuel left | 25 |
| Location | United States |
| Source of data | United States Energy Information Administration |
| Basis of calculation | Amount of fuel stored and consumed daily |
| Variability in number of days of supply | Between 22 and 55 days |
| Imbalance in supply and demand | Yes |
| Factors contributing to supply and demand issues | COVID-19 pandemic, shutdown of refineries, sanctions on Russian oil, refinery maintenance, decrease in refinery capacity |
| Impact of diesel shortage | Increase in energy prices, higher prices at the pump |
| Possibility of a shortage | Unlikely, as the US is constantly producing and importing diesel |
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What You'll Learn
The 25-day diesel stockpile in the US
In 2022, there were media reports of diesel supply disruptions, with headlines claiming that there was only a 25-day supply of diesel left. This particular shortage never fully materialised, but it left a lasting impression.
The United States, like many other countries, relies heavily on diesel fuel to power a variety of industries and vehicles. Diesel is a crucial fuel source for transportation, including trucks, ships, and trains, as well as for industrial machinery and generators. Therefore, a 25-day stockpile of diesel fuel is a significant amount of time to ensure the uninterrupted functioning of these sectors.
A 25-day diesel stockpile in the US would translate to millions of gallons of fuel, depending on the country's daily consumption rate. This stockpile would be distributed across various storage facilities, depots, and reserves, ensuring that there is enough fuel to meet the country's needs for almost a month.
Maintaining an adequate diesel stockpile is essential for energy security and economic stability. It helps safeguard against potential supply disruptions, such as those caused by natural disasters, geopolitical conflicts, or unexpected increases in demand. By having a substantial stockpile, the US can prevent shortages, stabilise prices, and ensure the continuous operation of essential services and industries that rely on diesel fuel.
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Diesel fuel supply and demand
Diesel fuel is a major transportation fuel and, as such, its demand generally follows economic trends. The demand for diesel fuel in the United States is fairly consistent and usually reflects the overall health of the economy. However, diesel fuel prices can fluctuate throughout the year. For instance, during fall and winter, the demand for heating oil can affect diesel fuel prices. This is because heating oil and diesel fuel are practically the same fuels, and changes in the demand for one can influence the price of the other.
The cost of crude oil accounted for about 50% of the monthly average U.S. retail on-highway diesel fuel prices from 2004 to 2023. Crude oil prices are determined by worldwide demand and supply. In turn, the demand for crude oil is influenced by world economic conditions and the demand for the petroleum products made from it. International demand for distillate fuel also affects U.S. diesel fuel prices. Many countries use distillate fuel for a large share of their electricity generation, and diesel engine cars are more common outside of the United States.
The U.S. vehicle fleet depends almost entirely on petroleum. If the supply of petroleum declines unexpectedly due to refinery problems or lagging imports, diesel inventories may rapidly decline. When stocks are low or falling, wholesalers and marketers may bid higher for available supplies, causing diesel fuel prices to remain high. Transportation costs also play a role, with areas farther from the Gulf Coast, the source of about half of U.S. diesel fuel production, tending to have higher diesel fuel prices. Diesel fuel prices on the West Coast, especially in California, are higher than in other regions due to taxes and supply issues. California's liquid fuels market is relatively isolated and largely supplied by in-region refinery production.
In some regions, seasonal swings in farmers' demand for diesel fuel can influence diesel fuel prices. Even retail stations near each other can have different costs and sources of supply, with high-volume truck stops that cater to large commercial vehicles tending to sell diesel fuel at lower prices than smaller-volume service stations. The retail price of diesel fuel reflects local market conditions, including the location and ownership of retail outlets. Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase diesel fuel on the wholesale market.
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Diesel fuel imports
In 2022, diesel supply disruptions caused panic among the people with headlines such as "only a 25-day supply of diesel left". However, this shortage never actually occurred. While diesel fuel import figures are not readily available, it is known that domestic production of renewable diesel fuel increased significantly in 2022. This increase in domestic production may have impacted imports. Renewable diesel can be used in existing diesel engines without any modifications, and it meets the same fuel quality specifications as petroleum diesel. The majority of imported renewable diesel fuel comes from Neste's facility in Singapore. This type of diesel fuel is used primarily in California due to economic benefits provided under the Low Carbon Fuel Standard.
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Diesel fuel production
Diesel fuel is a liquid fuel designed for use in diesel engines, which are internal combustion engines that compress inlet air and inject fuel without requiring spark ignition. Rudolf Diesel, the German scientist and inventor who created the diesel engine in the 1890s, initially experimented with various fuels, including crude oil, kerosene, lamp oil, petrol, ligroin, coal tar creosote, paraffin oil, gasoline, and fuel oil. Diesel engines eventually settled on using a fractional distillate of petroleum fuel oil, also known as petrodiesel, as their primary fuel source. However, alternative fuel sources that are not derived from petroleum, such as biodiesel, biomass-to-liquid (BTL), and gas-to-liquid (GTL) diesel, are gaining traction.
The United States is a major producer and consumer of diesel fuel, with U.S. petroleum refineries supplying most of the country's diesel needs. In 2022, U.S. refineries produced about 1.75 billion barrels (73.46 billion gallons) of ultra-low-sulfur distillate (ULSD), a type of diesel fuel with a sulfur content of 15 parts per million or less. This production exceeded U.S. consumption of ULSD in the same year, which totalled about 1.44 billion barrels (60.30 billion gallons). To meet demand, the United States imported approximately 0.07 billion barrels (2.80 billion gallons) of ULSD, with Canada providing 72% of these imports.
The production of diesel fuel involves refining crude oil at petroleum refineries. On average, U.S. refineries can produce 11 to 12 gallons of diesel fuel from each 42-gallon barrel of crude oil. The diesel fuel produced is then transported to consumers through pipelines, ships, trains, and trucks. To ensure quality, the fuel is tested at various stages to meet local, state, and federal specifications. If the fuel fails to meet these specifications, it may be sent back to the refinery for further processing or sold as a different product.
Biodiesel, an alternative to petroleum-derived diesel, is produced from vegetable oil, animal fats, or methanol and ethanol through a process called transesterification. This process results in the production of biodiesel, glycerine, water, and methanol or ethanol byproducts. Biodiesel can be used on its own or blended with petroleum-derived diesel in various percentages. Synthetic diesel is another alternative fuel source produced from natural gas and other carbonaceous precursors using the Fischer-Tropsch process.
While diesel fuel production and supply are crucial, it is important to note that diesel supply disruptions in 2022 sparked concerns about potential shortages. Although the predicted 25-day supply crisis did not fully materialize, it left a lasting impression and highlighted the importance of stable diesel fuel production and distribution.
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Diesel fuel prices
In 2022, a diesel supply disruption sparked fears of a 25-day supply shortage, though this never came to pass. While diesel fuel prices are released weekly, I could not find information on the current price of diesel fuel or how many days' worth of diesel fuel are available. However, I did find information on the rising prices of old diesel trucks.
Prices for old diesel trucks are increasing, and they are in high demand. Diesel engines are known for their durability and ease of maintenance compared to modern gas or hybrid engines. They are built to withstand harsh conditions and, when properly maintained, can outlast their owners. This has led to high prices for even old and beat-up diesel trucks.
The demand for old diesel trucks may also be driven by the desire for vehicles that can be easily fixed with basic tools, rather than requiring complex computer software and diagnostics. Newer diesel engines, in particular, have been criticized for their complicated designs.
Additionally, some states have stricter emissions requirements for diesel vehicles, which may impact the demand for older diesel trucks. For example, California generally has strict emissions regulations, but diesel pickups built before 1998 are exempt from smog checks. In contrast, Arizona requires emissions tests for diesel trucks manufactured after 1967, but only in certain counties. These varying state regulations may contribute to the demand for older diesel trucks in certain regions.
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Frequently asked questions
Yes and no. The US did have 25 days of diesel fuel left as of October 2022, but this number is constantly changing. The US has had between 22 and 55 days' worth of diesel stockpiled since 1991.
The 25-day figure is an industry benchmark used to assess overall supply and demand. It is calculated based on the amount of fuel stored and consumed daily throughout the country.
There are several factors contributing to the current supply and demand issues, including the COVID-19 pandemic, refinery shutdowns, and sanctions on Russian oil due to the Ukraine war.
Yes, people may have to pay higher prices at the pump as the diesel fuel supply is "very tight" and the system is "under strain."
While there are concerns about future oil production, experts claim that there are no reported shortages of diesel fuel in the US. The diesel fuel supply is expected to rebound as the supply chain improves.
