Rajan Wilcox
Fossil fuels, including diesel, are a limited resource that we have been consuming at an alarming rate. In October 2022, the U.S. had approximately 25 days' worth of diesel fuel in storage, which caused concern about the possibility of a diesel shortage. However, this figure does not account for ongoing diesel production and imports, and experts confirmed that the U.S. will not run out of diesel fuel in the short term. While there may be regional shortages and higher prices, the diesel supply is continually replenished, and the risk of a complete outage is low.
| Characteristics | Values |
|---|---|
| Current diesel supply in the US | 25.8 days' worth of diesel in stores |
| Number of days the world would have diesel if it stopped producing | 25 days |
| Number of barrels available on the East Coast markets | 25 million |
| Price of diesel fuel | $5.30 a gallon |
| Number of barrels imported by the US from Russia before the Ukraine invasion | 700,000 barrels per day |
| Number of days' worth of diesel supply usually available | 33 days |
| Number of days' worth of diesel supply available as of November 11 | 26.6 days |
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What You'll Learn
Diesel fuel is a fossil fuel, a limited resource
Diesel fuel is a fossil fuel, and fossil fuels are a limited resource. Fossil fuels are a source of energy, including petrol and diesel, that we have been using for decades. They are made from the remains of plants, animals, and other organisms that were buried and became fossils through geological processes. This process takes millions of years, and as a result, fossil fuels are considered non-renewable resources.
The wide-scale use of fossil fuels, such as coal and petroleum, in steam engines enabled the Industrial Revolution. Even today, oil, coal, and gas serve about 80% of our energy needs, according to the U.S. Energy Information Administration. However, burning fossil fuels releases a huge amount of carbon dioxide and other greenhouse gases, contributing to climate change and air pollution.
Due to their limited nature and the environmental impact of their use, there is a growing focus on transitioning to renewable energy sources and reducing our reliance on fossil fuels. This is known as the fossil fuel phase-out, which aims to gradually reduce the use and production of fossil fuels to zero. This transition involves exploring alternative energy sources such as wind and solar power, as well as electrifying transportation and buildings.
While there is a push for renewable energy sources, diesel fuel is still in high demand. In November 2022, reports of a ""diesel fuel shortage" in the U.S. caused concern. However, this was a misunderstanding of a government statistic. While stockpiles of distillate fuels, including diesel fuel, were low, it did not mean that the country would run out of diesel fuel imminently. Low stockpiles can lead to higher diesel fuel prices and potential short-term regional shortages, but it does not indicate that we are running out of diesel fuel completely.
In summary, diesel fuel is a fossil fuel, and fossil fuels are a limited resource that we have relied on for energy for decades. While we are not running out of diesel fuel immediately, the transition to renewable energy sources is essential to reduce our environmental impact and dependence on finite resources.
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Diesel fuel shortages won't affect consumers at the pump
Diesel fuel is a fossil fuel that has been used for decades as an energy source. Fossil fuels are a limited resource, and the process of creating them releases a huge amount of carbon dioxide, making them less than ideal. While diesel fuel reserves have dwindled to record lows, causing supply chain disruptions, this does not mean that consumers will face shortages at the pump.
In November 2022, there were reports of a "diesel fuel shortage" in the United States, driven by a misunderstanding of a government statistic. The statistic indicated that there were 25.9 days' worth of diesel fuel supply in the country, which does not mean that the country will run out of diesel fuel in 25.9 days. Instead, it is a measurement of supply and demand, indicating that refiners are struggling to keep up with demand.
While low stockpiles can lead to regional fuel shortages and higher prices, it is unlikely that consumers will be affected at the pump. Mansfield Energy, a major diesel supplier in the Southeast US, reported in 2022 that their pumping terminals were running out of fuel, but they were still able to supply their customers. Governments can also intervene to help expedite the transport of fuel, as seen in the cases of South Dakota, Iowa, and Nebraska, where the governors issued emergency waivers of hours-of-service rules for truckers transporting fuel.
The diesel fuel shortage has been attributed to several factors, including reduced oil production, post-pandemic demand surge, manufacturing activity trends, the war in Ukraine, and supply chain issues. While these factors have impacted the availability and price of diesel fuel, they have not resulted in widespread consumer shortages at the pump.
In summary, while diesel fuel shortages have impacted supply chains and caused price increases, consumers are unlikely to experience diesel fuel shortages at the pump. The dynamic nature of the fuel supply chain, government interventions, and the ability of suppliers to adapt and fill gaps in supply help ensure that consumers can continue to access diesel fuel, despite low stockpiles and regional shortages.
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Diesel fuel supply is replenished by refineries and imports
Diesel fuel is a fossil fuel that has been used for decades and is a limited resource. While it is alarming that the world is consuming fossil fuels at a rapid rate, it is important to note that we are not running out of diesel fuel anytime soon. The diesel fuel supply is dynamic and continually being replenished by refineries and imports.
In 2022, U.S. refineries produced about 1.75 billion barrels (73.46 billion gallons) of ultra-low sulfur distillate (ULSD), which is used as diesel fuel and heating oil. The total ULSD consumption in the United States was about 1.44 billion barrels (60.30 billion gallons). Although ULSD production exceeded consumption, the United States still imported about 0.07 billion barrels (2.80 billion gallons) of ULSD, with 72% of these imports coming from Canada.
Refineries play a crucial role in producing diesel fuel through the processing of crude oil. The characteristics of crude oil determine how refineries refine it. For instance, light crude oils with higher API gravity can be easily distilled to produce high-value products such as gasoline, diesel fuel, and jet fuel. On the other hand, heavy crude oils require additional and more expensive processing to achieve the desired results. Refineries may also add other oils and liquids during processing to create the final products sold to consumers.
In addition to refineries, imports also contribute significantly to the diesel fuel supply. Before Russia's invasion of Ukraine, the U.S. imported nearly 700,000 barrels per day of petroleum and petroleum products, including refinery inputs that boosted distillate supplies. While refineries have some flexibility in shifting gasoline production to diesel, it is a relatively small amount. The availability of imports helps to ensure that the diesel fuel supply remains stable and can meet demand.
Although there may be short-term regional shortages of diesel fuel, suppliers actively work to fill in any gaps in the supply chain. Governments can also intervene to expedite the transport of fuel, as seen through emergency waivers issued by governors in certain states. The diesel fuel supply is dynamic and constantly being replenished by refineries and imports, ensuring that we do not run out of diesel fuel in the immediate future.
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Diesel fuel prices are high due to low stockpiles
Diesel fuel is a fossil fuel, a limited resource that we have been consuming at an alarming rate. While we are not going to run out of diesel fuel, low stockpiles have led to higher prices.
Distillate stocks are low, and the U.S. Energy Information Administration (EIA) reported that the U.S. had 25.9 days' worth of diesel supply as of October 21, 2022. This has been misinterpreted by some in the media and on social media to mean that the country will run out of diesel fuel soon. However, this number is a measurement of supply and demand, indicating that refiners are struggling to keep up with demand.
The low stockpiles have resulted in higher diesel fuel prices, especially in the Northeast, where stocks are the lowest. On a typical day, East Coast markets have 50 million barrels in storage, but currently, there are less than 25 million barrels available. The increased demand for diesel fuel in the Northeast is due to the competition from fuel oil for home heating during the winter.
The low stockpiles can also lead to short-term regional shortages, causing prices to rise even further. Mansfield Energy's Alan Apthorp noted that while suppliers will work to fill in gaps in supply, the fuel will be delivered at higher costs. Governments can intervene to expedite the transport of fuel, as seen through emergency waivers issued by the governors of South Dakota, Iowa, and Nebraska.
The low distillate stockpiles are influenced by various factors. Before Russia's invasion of Ukraine, the U.S. imported nearly 700,000 barrels per day of petroleum and petroleum products, boosting distillate supplies. Additionally, there is increased demand for diesel fuel due to the Mississippi River drought, which has shifted freight onto trucks, and the potential rail strike. These factors contribute to the low stockpiles and, consequently, the high diesel fuel prices.
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Diesel fuel production can be shifted to gasoline
There is no need to worry about running out of diesel fuel anytime soon. While it is true that fossil fuels, including diesel, are limited resources, and we are consuming them at an alarming rate, it is important to understand that the idea of a "diesel fuel shortage" is often driven by a misunderstanding of statistics. In reality, the concern is about low stockpiles of distillate fuels, which include diesel fuel and heating oil. This can lead to regional shortages and higher prices, but it does not indicate an imminent outage.
Diesel fuel production can indeed be shifted to gasoline through various refinery process adjustments. Refineries have some flexibility in this regard, although the amount is relatively small. To increase the production of gasoline, specific processes such as coking, residual hydrocracking, visbreaking, FCC (fluid catalytic cracker), isomerization, reforming, and alkylation can be utilized. These processes can maximize gasoline output while reducing diesel production. However, it is important to note that a shift towards more gasoline production may not be the best long-term strategy.
The world is currently experiencing a transition in energy sources, with a decrease in the demand for oil-based fuels like gasoline and an increase in the demand for alternatives like electric vehicles. This shift is particularly prominent in the transportation sector, where the demand for gasoline is expected to be significantly impacted due to the rise of electric cars. As a result, forward-thinking refiners are already adjusting their production modes to capture the growing demand for petrochemicals and jet fuel instead of solely focusing on gasoline.
While diesel fuel production can be partially shifted to gasoline, it is crucial to recognize that the energy landscape is evolving. The focus is now on finding sustainable alternatives to fossil fuels, such as solar and wind power, to reduce our reliance on finite resources like diesel and gasoline. By investing in and adopting these alternative energy sources, we can ensure a more sustainable future and reduce the environmental impact of transportation. Therefore, while a temporary shift to gasoline production may be feasible, the larger priority should be on embracing and accelerating the transition to cleaner energy solutions.
In summary, while there is no immediate danger of running out of diesel fuel, the low stockpiles can lead to regional shortages and higher prices. Diesel fuel production can be adjusted to increase gasoline output through various refinery processes. However, the long-term strategy should focus on adapting to the changing energy landscape. The demand for oil-based fuels like gasoline is projected to decline, while the demand for alternatives, such as electric vehicles, is on the rise. Therefore, the primary goal should be to accelerate the transition to sustainable energy sources, reduce our dependence on fossil fuels, and promote a greener future.
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Frequently asked questions
There is no fixed date as diesel fuel is a limited resource that is being continually replenished by production and imports.
Fossil fuels, such as diesel, are limited resources that we are consuming at an alarming rate. However, it is unlikely that we will run out of diesel fuel anytime soon as the supply is constantly being replenished.
The "days of supply" metric measures the amount of distillate in storage compared to estimates of national demand. This figure does not consider distillate fuel that is produced at refineries or imported from other countries.
Low inventories of diesel fuel can lead to higher prices for consumers and contribute to inflation. It can also cause regional shortages and impact the transportation industry, affecting the movement of goods and services.
Yes, there are alternatives to diesel fuel, such as solar and wind power, which can be used in electric cars. These alternatives can help reduce the impact of transportation on the environment and decrease greenhouse gas emissions.
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