Regan Brown
Despite reports of a diesel shortage in the United States, experts say the country is not about to run out of diesel fuel. As of October 28, 2022, the U.S. had 25.8 days' worth of diesel in its stores, according to the Energy Information Administration (EIA). This figure, which is the lowest level since 2008, has sparked concerns about a potential diesel shortage, especially with the increased demand for diesel fuel due to the Mississippi River drought and the approaching winter season. However, the EIA's calculation does not account for ongoing diesel production and imports, and experts emphasize that the fuel supply chain is dynamic, with suppliers working to fill in any gaps in supply. While short-term regional shortages may occur, leading to higher diesel prices, the U.S. is not facing an imminent diesel fuel crisis.
| Characteristics | Values |
|---|---|
| Is America about to run out of diesel fuel? | No, but there is a diesel shortage. |
| Reason for shortage | Impact of the Russian invasion of Ukraine on global energy supplies and imports. |
| Inventory levels | Very low |
| Days of diesel supply left | 25.8 days as of Oct 28, 2022 |
| Impact on prices | Prices are expected to surge. |
| Regional shortages | Possible short-term regional shortages. Some cities might run dry for a few days. |
| Impact on inflation and heating bills | Acute shortage of diesel fuel in the US is threatening to keep inflation and heating bills high through the winter. |
| Strategies to mitigate shortage | Diversifying energy sources, improving energy efficiency, and managing supply chains effectively. |
| Outlook for diesel in 2024 | Multifaceted, influenced by global trends, economic factors, regulatory mandates, and technological advancements. |
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What You'll Learn
Experts say the US won't run out of diesel fuel
Despite low stockpiles of distillate fuels, including diesel fuel, the US is not about to run out of diesel fuel, according to experts. While data from the Energy Information Administration (EIA) shows that the US had about 25 days' worth of diesel supply as of late October 2022, this figure doesn't account for ongoing diesel production. The EIA's data is based on taking US inventory and dividing it by daily demand, and the low supply figure has been misinterpreted by some in the media and on social media as meaning the country will run out of diesel fuel imminently.
University of Houston energy lecturer Ed Hirs likened the situation to a grocery store that carries a week's worth of milk, saying that supply is always being replenished. He noted that when the diesel inventory was at 35 days in 2021, the US did not run out of diesel, and with the current figure at around 25 days, the country is not going to run out of diesel. Carey King, an energy researcher at the University of Texas at Austin, echoed this sentiment, stating that the US could only run out of diesel if there were no more diesel production, but diesel is produced every day.
While there may be short-term regional shortages of fuel in some areas, such as the Northeast and Mid-Atlantic, these outages in individual stations are not indicative of broader shortages, according to Patrick De Haan of GasBuddy. Mansfield Energy's Alan Apthorp also emphasized the dynamic nature of the fuel supply chain, where suppliers will work to fill in any gaps in supply. Governments can also intervene to help expedite the transport of fuel, as seen through emergency waivers issued by the governors of South Dakota, Iowa, and Nebraska.
The low stockpiles of diesel fuel have resulted in higher diesel fuel prices, especially in regions with low stocks, such as the Northeast, where diesel faces competition from fuel oil for home heating during the winter. The increased demand for diesel is influenced by factors such as the Mississippi River drought, which has shifted barge freight onto trucks, and the potential for a rail strike. The Biden administration has been considering limiting fuel exports to lower consumer prices in response to the diesel shortage.
While the US is not facing an imminent diesel shortage, the broader context of a shift towards renewable energy sources and the reduction of dependence on fossil fuels, including diesel, is important to note. Strategies to enhance energy efficiency, diversify energy sources, and manage supply chains effectively will play a critical role in mitigating the potential adverse effects of increased diesel demand on inflation and economic stability.
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Misinformation about an imminent shortage
There has been misinformation circulating online that the United States is on the verge of running out of diesel fuel. This claim has been deemed false by experts, who confirm that while diesel inventories are indeed at low levels, the country will not run out of diesel fuel imminently.
The misinformation appears to stem from a misinterpretation of data from the Energy Information Administration (EIA). As of October 28, 2022, the EIA reported that the US had 25.8 days' worth of diesel in its stores, which is lower than in previous weeks. However, this figure does not account for ongoing diesel production and imports. The EIA's data assumes that US refineries stop producing distillates and that there are no imports from other countries, which is not the case.
The low inventories have caused concerns about a possible diesel shortage, leading to higher diesel fuel prices, especially in regions like the Northeast, where stocks are the lowest. The increased demand for diesel in the Northeast during the winter months for home heating further contributes to the strain on diesel supplies. However, experts emphasize that this does not indicate that a diesel outage is imminent.
While it is true that the US is facing a diesel shortage, with inventories at their lowest level since 2008, it is important to clarify that this does not mean that the country will run out of diesel fuel in a matter of days or weeks. The Biden administration is considering limiting fuel exports to lower consumer prices and is exploring various options to replenish diesel supplies.
In summary, while the United States faces a diesel shortage with low inventories and high prices, it is misleading to claim that the country is on the brink of running out of diesel fuel. The situation is dynamic, and suppliers are working to fill in supply gaps. Government interventions, such as emergency waivers for truckers transporting fuel, further help to mitigate the impact of low stockpiles.
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Regional shortages and higher prices
While the United States is not about to run out of diesel fuel, low stockpiles have led to concerns about regional shortages and higher prices.
Data from the Energy Information Administration (EIA) revealed that as of October 28, 2022, the US had 25.8 days' worth of diesel in its stores, a lower supply than in previous weeks. This figure, however, does not account for ongoing diesel production. Experts clarified that while the supply is lower than usual, the country will not run out of diesel fuel.
Despite this reassurance, the low stockpiles have raised concerns about potential regional shortages and the resulting impact on prices. Mansfield Energy's Alan Apthorp acknowledged the possibility of short-term regional fuel shortages, with some cities facing temporary diesel outages. He explained that such shortages would drive up prices, making it more expensive to transport fuel from surrounding markets with available supplies.
The Northeast and Mid-Atlantic regions, in particular, could experience extremely tight supply conditions. The demand for heating oil during the winter months further exacerbates the situation in these regions. As a result, diesel fuel prices are expected to surge, affecting both consumers and industries that rely heavily on diesel, such as trucking and freight transportation.
To mitigate the impact of potential regional shortages and higher prices, governments have taken proactive measures. The governors of South Dakota, Iowa, and Nebraska issued emergency waivers of hours-of-service rules for truckers transporting fuel, ensuring a more efficient supply chain.
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The impact of the war in Ukraine
The US is not about to run out of diesel fuel, despite some media outlets and social media users claiming otherwise. As of 28 October 2022, the country had 25.8 days' worth of diesel in its stores, according to the Energy Information Administration (EIA). This figure does not account for ongoing diesel production.
The Biden administration has been considering limiting fuel exports to lower consumer prices in response to the diesel shortage. The US is also receiving diesel imports from the United Arab Emirates.
The US banned imports from Russia following its invasion of Ukraine on 24 February 2022. This has contributed to the current supply crunch, with refineries' seasonal maintenance also playing a part. The National Economic Council Director, Brian Deese, stated that the US diesel supply has been "drained by the impact the Russian invasion of Ukraine has had on global energy supplies and imports".
The war in Ukraine has also led to increased diesel demand in the US as the Mississippi River drought has forced barge freight onto trucks. Additionally, the looming winter season will increase demand for diesel for home heating, causing a likely increase in prices.
The conflict has also affected global diesel supplies more broadly. During the Middle East conflict, some tankers avoided entering a vital Red Sea conduit due to attacks on ships, reducing the supply.
The war in Ukraine has highlighted the need for renewable energy sources and a reduction in dependence on fossil fuels, including diesel. The transportation industry is shifting towards renewable biodiesel, which is more sustainable and can be engineered to burn cleaner, reducing greenhouse gas emissions.
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The viability of renewable alternatives
While the US is not running out of diesel fuel, the search for alternative energy sources is still a pressing issue. Renewable diesel and biodiesel are two such alternatives that have been in the US fuel market for over a decade. Biodiesel is created through a chemical reaction between vegetable oils or animal tallow and methanol. It is blended with conventional diesel in today's vehicles, with blends of less than 5% not requiring labels. Biodiesel does have some limitations, such as a higher gel point that impacts its use in winter and the need for a maximum blend requirement.
Renewable diesel, on the other hand, is chemically identical to petroleum diesel. It is made from fats and oils, such as soybean oil or canola oil, and processed through hydrotreating. This process is similar to diesel production in oil refineries. Renewable diesel meets the ASTM D975 specification, allowing it to be used in existing infrastructure and diesel engines. It also reduces carbon intensity and emissions when compared to petroleum diesel.
The US federal Renewable Fuel Standard (RFS) and state-level clean fuels programs have driven the production and consumption of renewable diesel. The viability of renewable diesel as a drop-in fuel will continue until another technology emerges that is suitable for similar use cases.
In the longer term, other alternative energy sources like renewable natural gas, battery electric vehicles, and fuel cell vehicles will compete with renewable diesel. However, the use of conventional fuels and drop-in fuel alternatives will likely remain for decades, especially in segments such as long-haul trucking, Class I rail, and heavy-duty equipment, where current substitutes like batteries may not be well-suited due to weight, intensity, and duration of use considerations.
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Frequently asked questions
No, America is not about to run out of diesel fuel. While there may be short-term regional shortages, the country will not run out of diesel fuel.
People are concerned about a potential diesel shortage due to a combination of factors, including low stockpiles, increased demand, and the impact of the Russian invasion of Ukraine on global energy supplies and imports.
Low stockpiles of diesel in America have resulted in higher diesel fuel prices, especially in regions like the Northeast, where stocks are particularly low.
The Biden administration has considered limiting fuel exports to lower consumer prices, and the country is receiving additional shipments of diesel fuel from other regions, such as the United Arab Emirates. Additionally, the transportation industry is exploring renewable alternatives to traditional diesel, such as biodiesel, and strategies to enhance energy efficiency and diversify energy sources are being discussed.
