Rajan Wilcox
Diesel fuel is a type of fuel derived from crude oil, powering a significant portion of the global transportation sector, including trucks, buses, trains, ships, and some cars. In 2021, China faced an energy crisis that disrupted the global supply chain and resulted in a rise in commodity prices, leading to diesel rationing. More recently, in 2025, diesel fuel has become notably expensive, impacting industries, consumers, and economies worldwide. This has been attributed to various factors, including the complex refining requirements for producing low-sulfur diesel, limited refinery capacity, increased fuel exports, and higher costs in the supply chain. Additionally, diesel engines are known for their fuel efficiency and torque, making diesel fuel essential for heavy transport and logistics. However, the rising cost of diesel affects daily life by influencing the price of goods, delivery services, and heating costs in certain regions. While there have been warnings of potential diesel rationing in the United States, particularly on the East Coast, due to low inventories and refining capacity issues, it is important to consider the broader economic challenges and supply chain disruptions contributing to these developments.
| Characteristics | Values |
|---|---|
| Is diesel fuel being rationed? | Yes, diesel fuel is being rationed in China as of October 2021. There are concerns about potential rationing in the US, particularly on the East Coast. |
| Reason for rationing in China | Ongoing energy crisis and rebound in economic activities after the Covid-19 pandemic |
| Reason for potential rationing in the US | Low inventories, decrease in refinery capacity, and increased fuel exports |
| Impact of high diesel prices | Industries, consumers, and economies worldwide are affected. It influences the price of goods, delivery services, and heating costs in certain regions. |
| Factors contributing to high diesel prices | - Supply and demand imbalance |
| - Geopolitical tensions and sanctions | |
| - Production decisions by OPEC | |
| - Complex refining requirements | |
| - Carbon pricing and taxes | |
| - Labor shortages and logistical challenges |
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What You'll Learn
Diesel fuel is essential for transport and logistics
The use of diesel fuel in transportation has a global impact. In Europe, diesel fuel is standardized with the EN 590 standard, and ultra-low-sulfur diesel (ULSD) is commonly used in the UK, mainland Europe, and North America. In Australia, diesel is known as distillate, while in Indonesia, Israel, and most of the Middle East, it is called Solar. In China, an energy crisis in 2021 led to diesel fuel rationing, causing disruptions in the global supply chain and affecting commodity prices.
Despite the advantages of diesel engines in transportation, there are some drawbacks. Diesel engines are more expensive to buy and run than gasoline engines, and they require more oil and regular additions of diesel exhaust fluid (DEF) to reduce nitrogen oxide emissions. However, diesel engines still produce significant amounts of harmful emissions, particularly in older models.
To address environmental concerns, alternative fuels are being developed and adopted. Biodiesel, biomass-to-liquid (BTL), and gas-to-liquid (GTL) diesel are increasingly used, and electric alternatives are expected to match the running costs of diesel engines in the future. However, as of 2025, electric big rigs only make up about 1% of the US heavy-duty fleet.
In summary, diesel fuel plays a critical role in transport and logistics, particularly in the US, where it facilitates the movement of goods, people, and equipment. While there are efforts to transition to more environmentally friendly alternatives, diesel remains a dominant fuel source in the transportation sector due to its performance, efficiency, and durability advantages.
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Diesel engines are more fuel-efficient than gasoline
As of October 2021, diesel fuel was reportedly being rationed in China due to an ongoing energy crisis. This energy crunch was also observed in other parts of the world, including India, and was attributed to a rebound in economic activities after the severe downfall caused by the COVID-19 pandemic. The fuel supply failed to keep up with the surge in demand, leading to record-high fossil fuel prices.
Now, let's discuss the topic of diesel engines being more fuel-efficient than gasoline.
Diesel engines are generally more fuel-efficient than gasoline engines, offering better fuel economy and mileage. This efficiency stems from the higher energy density of diesel fuel, which contains more potential energy per gallon. The increased thermal efficiency of diesel engines, at about 20% more than gas engines, results in a higher power-to-fuel ratio and improved fuel economy. This efficiency advantage is particularly notable in heavy-duty trucks and vehicles used for long-distance travel or hauling heavy loads.
Diesel engines typically have higher torque generation, making them well-suited for towing and hauling. The higher torque output is achieved through higher compression ratios, longer piston strokes, and higher-pressure turbos. Additionally, diesel engines are known for their durability and longevity due to their robust construction and lower operating temperatures, resulting in less wear and tear.
However, it is important to consider the drawbacks of diesel engines. They tend to be more expensive to purchase and run, and they have higher maintenance requirements for components like fuel filters and emissions control systems. Diesel engines also produce higher levels of nitrogen oxides and particulate matter emissions, contributing to environmental concerns. Nevertheless, advancements in diesel technology are addressing these emission issues.
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Diesel fuel prices are at an all-time high
While diesel fuel prices have been increasing, they still remain lower than gasoline prices in the US, and diesel engines are more fuel-efficient. However, diesel engines are more expensive to buy and run, and they require more oil and the addition of diesel exhaust fluid (DEF) to reduce harmful emissions.
The popularity of diesel engines in heavy-duty trucks remains high due to their power, durability, and efficiency. Commonly cited research from HDT shows that about 76% of heavy-duty trucks on US roads use diesel power. Diesel fuel is more power-dense than gasoline, and diesel engines operate with a higher compression ratio, longer piston strokes, and higher-pressure turbos, resulting in greater torque.
Despite the advantages of diesel engines, the high and rising diesel fuel prices may impact their continued dominance in the market. It remains to be seen whether alternatives, such as electric big rigs, will become more attractive options if diesel fuel prices continue to climb.
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Diesel fuel production has decreased due to refinery closures
The primary reason for the closure of refineries is the complex interplay between market forces and energy policies. On the one hand, refineries face the challenge of adapting to changing energy landscapes. The shift towards cleaner and more sustainable energy sources has influenced the demand for fossil fuels, with projections indicating a decline in fuel demand over time. This shift in demand has made significant investments in refinery infrastructure less appealing, as companies are hesitant to commit substantial capital that may take years to yield returns.
Additionally, government policies aimed at phasing out fossil fuels have also played a role. Refineries, already facing potential losses, are confronted with the costly prospect of maintaining compliance with evolving regulations. As a result, some refineries have opted to close down rather than incur substantial expenses to remain operational.
The impact of these refinery closures is being felt across the globe, with Europe and the United States expected to witness the permanent shutdown of approximately 1 million barrels per day of refining capacity in 2025. This reduction in refining capacity is anticipated to provide price support for diesel in the coming year, with traders and analysts predicting a slight rebound in demand.
While the closure of refineries has contributed to decreased diesel fuel production, it is important to note that other factors, such as logistical limitations and weather-related issues, have also played a role in the overall decline in diesel fuel inventories.
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Diesel rationing in China due to the energy crisis
China is currently facing an energy crisis due to a combination of factors, including soaring coal prices, energy shortages, and the aftermath of the COVID-19 pandemic. As a result, diesel fuel is being rationed across the country, with truck drivers facing long waits to refuel and only receiving a fraction of their vehicle's capacity.
The energy crisis in China has led to power rationing in several provinces, with factories and households experiencing sporadic power cuts. This has disrupted manufacturing activities, reduced productivity in factories, and caused concern among importers of Chinese-made goods. In an effort to maintain operations, some factories have turned to diesel-fueled generators, further increasing the demand for diesel fuel.
The National Development and Reform Commission (NDRC) has called for all major Chinese regions to monitor their energy consumption for the remainder of the year, as they have failed to meet their targets earlier on. This has contributed to the implementation of power rationing policies and "dual-control" power warnings in certain provinces.
The diesel rationing at Chinese gas stations is a response to the country's power crisis, which has been exacerbated by coal and natural gas shortages, as well as high natural gas prices in Asia. Long lines have formed at fuel retailers in some regions, and truck drivers are facing significant challenges in obtaining sufficient fuel. In Shijiazhuang city in Hebei province, for example, truck drivers are reportedly limited to purchasing only 100 litres of diesel, about 10% of their vehicle's capacity. Other parts of the country face even stricter rations, with drivers allowed to buy up to just 25 litres.
The energy crisis in China is expected to have broader implications for the global supply chain, leading to disruptions and a rise in commodity prices. The rebound in economic activities after the COVID-19 pandemic has contributed to the energy crunch, as fuel supply has struggled to keep up with the surge in demand. As a result, fossil fuel prices have reached record levels.
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Frequently asked questions
Yes, diesel fuel is reportedly being rationed in China due to an ongoing energy crisis.
The energy crisis in China has been attributed to a rebound in economic activities after a severe downfall due to the Covid-19 pandemic. As a result, fuel supply has failed to keep up with the surge in demand, leading to record-high fossil fuel prices.
There are concerns about potential diesel fuel rationing in other parts of the world, particularly in the eastern regions of the United States. John Catsimatidis, CEO of United Refining Co., warned that diesel inventories in the East Coast region had hit multi-decade lows, and there could be a shortage during the summer months. This situation is caused by declining refinery capacity and increased fuel exports to Europe.
