Mercedes Mullins
In October 2022, it was reported that the US had 25 days' worth of diesel supply left, causing widespread panic and speculation that the country would run out of diesel fuel in 25 days. However, this claim was quickly refuted by experts, who clarified that the 25-day figure is a benchmark used to assess supply and demand rather than a countdown to zero. The diesel supply in the US is continually being replenished by ongoing production and imports, and the risk of a complete outage is highly unlikely. While low stockpiles may lead to higher prices, it is important to understand that temporary regional shortages can occur without causing a nationwide crisis.
| Characteristics | Values |
|---|---|
| Possibility of diesel fuel running out in 25 days | Unlikely |
| Reason for the claim | Low stockpiles of distillate fuels |
| Current supply of diesel fuel | 25.9 days as of October 21 |
| Average supply of diesel fuel | 30 days |
| Impact of low supply | Higher diesel prices |
| Factors contributing to low supply | Seasonal maintenance, COVID-19 pandemic, competition with Europe due to the war in Ukraine |
| Actual shortage of diesel fuel | No reported shortages |
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What You'll Learn
- The 25-day figure is a supply that is continually replenished by production and imports
- The 25-day figure is used as an industry benchmark to assess supply and demand
- The US diesel supply is down about 15% compared to last year
- The war in Ukraine, refinery shutdowns, and the COVID-19 pandemic have reduced refining capacity
- Experts predict that diesel prices will remain high, affecting the cost of goods
The 25-day figure is a supply that is continually replenished by production and imports
Several media outlets and social media users have misinterpreted the 25-day figure to mean that the US will run out of diesel fuel in 25 days. However, this number does not indicate a finite amount; rather, it is a dynamic supply that is continually replenished by ongoing production and imports.
The 25-day figure represents the number of days of diesel supply available in the US if the country were to suddenly stop producing diesel and importing it from other countries. This scenario is highly unlikely as refineries are continuously producing diesel, and imports from other countries are ongoing.
The 25-day figure is a metric used to assess the overall supply and demand balance of diesel fuel in the US. It is calculated based on current consumption rates and does not account for imported diesel or diesel produced by refineries, which continuously refill the supply. While the US diesel supply is lower than in previous weeks, it is important to understand that this number fluctuates and is influenced by various factors.
The tight supply of diesel fuel in the US is primarily attributed to seasonal maintenance, the lingering effects of the COVID-19 pandemic, refinery shutdowns, and the country's competition with Europe for energy due to the war in Ukraine. These factors have contributed to reduced refining capacity, resulting in a strain on the diesel supply.
While the 25-day figure may indicate that refiners are struggling to keep up with demand, it does not imply that a diesel outage is imminent. The dynamic nature of the fuel supply chain ensures that suppliers will rally to fill any gaps in supply, preventing a complete shortage.
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The 25-day figure is used as an industry benchmark to assess supply and demand
The 25-day figure is not indicative of a countdown to a diesel shortage crisis. Instead, it is a metric used to assess the balance between supply and demand in the diesel industry. This figure is subject to change, influenced by various factors such as seasonal variations, refinery maintenance, and global events.
The 25-day figure represents the number of days of diesel supply available if the country's refineries suddenly stopped producing diesel and imports from other countries ceased. This scenario is highly unlikely, as refineries continuously produce diesel, and imports from various sources ensure a consistent supply. The 25-day metric is a dynamic measurement that fluctuates over time, influenced by demand, production rates, and imports.
The diesel supply in the US is typically replenished daily through ongoing production and imports. While the supply might be tighter than usual, it is not expected to result in a complete outage. The diesel supply chain is adaptable, and suppliers are quick to fill any gaps in supply. This dynamic nature of the supply chain helps prevent prolonged shortages.
The 25-day figure serves as a benchmark for the industry to monitor the balance between supply and demand. It provides insight into the ability of refiners to meet the existing demand. When the figure drops, it indicates that demand is outpacing supply, and refiners are struggling to keep up. However, this does not imply an imminent shortage but rather a need for refiners to increase production to meet demand.
The misinterpretation of the 25-day figure as a countdown to a diesel shortage has caused concern among the public. However, it is essential to understand that this number is a snapshot of supply and demand dynamics and does not predict a future shortage. The diesel supply chain is resilient, and while prices may fluctuate due to market conditions, the availability of diesel is not expected to abruptly cease.
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The US diesel supply is down about 15% compared to last year
The US diesel supply typically averages around 30 to 40 days, but it dropped to 25 days in late October 2022, causing concern among some that the country would run out of diesel fuel in 25 days. However, this fear is unfounded, as the 25-day figure is an industry benchmark that changes by fractions each week and does not account for ongoing diesel production and imports.
The low inventory is more indicative of refiners struggling to keep up with demand. The COVID-19 pandemic, refinery shutdowns, and the war in Ukraine have all contributed to a reduction in refining capacity. The reopening of the economy has also led to a surge in demand, putting the system under strain.
While there is no diesel shortage, the low inventory has resulted in higher diesel prices, which are expected to remain elevated. The tight supply could also lead to increased costs for logistics and delivery services, which may be passed on to consumers, impacting inflation in the near term and throughout the holiday season.
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The war in Ukraine, refinery shutdowns, and the COVID-19 pandemic have reduced refining capacity
While there is no diesel fuel shortage, the war in Ukraine, refinery shutdowns, and the COVID-19 pandemic have reduced refining capacity and contributed to low stockpiles of distillate fuels. This has resulted in higher diesel prices, with the national average for a gallon of diesel in the US reaching $5.317, a $1.59 increase from the previous year.
The Ukrainian conflict has directly impacted Russia's refining capacity, with Ukrainian drone attacks disabling approximately 10% of its refineries. These attacks, coupled with US sanctions on Russian oil tankers, are expected to force a slowdown in Russian oil production. The Ukrainian military has prioritized domestic production of long-range drones and missiles, bypassing Western restrictions on the use of weapons supplied by its partners.
Refinery shutdowns and reduced utilization have also contributed to the low stockpiles of distillate fuels. In the US, the Gulf Coast refinery maintenance and the outage at bp's refinery in Whiting, Indiana, have impacted refinery operations and utilization rates. These shutdowns have resulted in decreased inventories of motor gasoline and diesel, affecting regional retail prices.
The COVID-19 pandemic has also played a role in reducing refining capacity. The industry has had to adapt to changing market conditions, with refineries that can quickly adjust their production profiles being better positioned to navigate future disruptions. The pandemic has also accelerated the adoption of sustainable refining practices, driven by concerns over climate change and energy security.
While there is no imminent threat of a diesel fuel outage, the combination of these factors has resulted in higher diesel prices and low stockpiles. However, it is important to note that the situation is dynamic, and suppliers are expected to respond to fill in any gaps in the fuel supply chain.
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Experts predict that diesel prices will remain high, affecting the cost of goods
As of 1 November 2022, the US had 25.8 days' worth of diesel in stock, a lower supply than in previous weeks, according to the US Energy Information Administration (EIA). This has led to fears of a diesel shortage in the country. However, experts have clarified that the US will not run out of diesel in a few weeks. The 25-day figure is a measurement of supply and demand and does not account for imported oil or refinery production.
While there is no diesel shortage, low stockpiles have resulted in higher diesel prices. Diesel prices are higher than gasoline prices, with the national average for a gallon of diesel at $5.317, $1.59 higher than the previous year. The high diesel prices are a result of low stockpiles of distillate fuels, which include diesel fuel and heating oil. The low supply of diesel fuel is due to several factors, including seasonal maintenance, the lingering effects of the COVID-19 pandemic, and competition with Europe for energy as Western countries reduce their dependence on Russian gas due to the war in Ukraine.
The increased diesel prices have a trickle-down effect on the economy, leading to higher prices for goods and services. Trucking companies, for example, face higher costs to haul goods, which are then passed on to consumers in the form of higher prices for in-store purchases or online deliveries. The primary catalyst for the high diesel prices is the war in Ukraine, and experts predict that the situation could improve once the conflict ends.
The high diesel prices are also impacting the operations of smaller carriers in the trucking industry, with some expecting to exit the business due to the increased fuel costs. The high prices are further exacerbated by the high cost of doing business, including overhead, local real estate costs, taxes, and competition from local retailers. Diesel fuel prices in certain regions, such as the West Coast and California, are particularly high due to taxes and supply issues.
While the high diesel prices are causing concerns, experts predict that a true diesel shortage is unlikely. However, short-term regional shortages may occur, leading to even higher prices. The EIA forecasts that household expenditures for heating fuels will increase during the winter due to higher fuel costs and increased energy consumption.
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Frequently asked questions
No, diesel fuel will not run out in 25 days. The 25-day figure is a supply that is continually being replenished by ongoing production and imports.
The rumours are based on a misinterpretation of a government statistic. The 25-day figure is a measurement of supply and demand and does not account for imported oil or oil produced by refineries.
If diesel fuel runs out, trucks, trains, and barges will be unable to move, causing a food shortage, water crisis, and power grid issues. However, it is important to note that the U.S. is not going to run out of diesel fuel in 25 days or at all, as the supply is continually being replenished.
