Rajan Wilcox
In October 2022, the United States faced a diesel shortage, with a 25-day supply of diesel fuel remaining, according to the Energy Information Administration. This is the lowest level since 2008, and demand is at its highest seasonal level since 2007. The Biden administration has been accused of indifference towards the issue, which could cause a surge in prices and affect inflation. However, experts have refuted claims of an impending diesel shortage, stating that the 25-day figure does not account for ongoing diesel production and imports.
| Characteristics | Values |
|---|---|
| Date of data | 28th October 2022 |
| Number of days of diesel fuel supply in the US | 25.8 days |
| Number of barrels of diesel stockpiles in the US | 106 million |
| Year with similar diesel inventory levels | 1951 |
| Average number of days of diesel supply | 30 days |
| Demand for diesel | Highest seasonal level since 2007 |
| Reason for low supply | Competition with Europe for energy, refinery outages, seasonal maintenance, lingering effects of the COVID-19 pandemic, impact of the Russian invasion of Ukraine on global energy supplies and imports |
| Predicted consequences of low diesel supply | Increase in prices, inflation, high heating bills |
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What You'll Learn
The US has 25 days of diesel supply
The United States has experienced a diesel supply crisis, with only 25 days of diesel supply remaining as of late October 2022. This is the lowest level since 2008, and it has significant implications for the country's economy and inflation rates.
The Biden administration has faced criticism for its silence on the issue, especially with the midterm elections approaching. However, the administration has considered limiting fuel exports to lower consumer prices. The diesel supply crunch has been attributed to various factors, including seasonal maintenance, the impact of the COVID-19 pandemic, and competition with Europe for energy due to the war in Ukraine.
The low diesel supply has resulted in surging prices, affecting the cost of hauling goods, farming, and other industries that rely on diesel fuel. Diesel is crucial for semi-trucks, farms, and critical manufacturing sectors. The high prices are expected to continue through the winter, as demand for diesel to heat homes increases.
Despite the low supply, experts assure that the US will not run out of diesel fuel in 25 days. The 25-day figure doesn't account for ongoing diesel production and imports. The situation is still concerning, and the National Economic Council Director, Brian Deese, stated that "all options are on the table" to replenish US supplies.
The US government is exploring various options to address the diesel supply issue and mitigate its impact on the economy and inflation. The situation highlights the importance of diesel fuel in the US and the need to ensure stable supplies to prevent further economic disruptions.
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The Biden administration's response
The Biden administration has been accused of remaining silent on the issue of dwindling diesel fuel supplies, with some speculating that the administration is hoping the news doesn't reach the mainstream ahead of the midterm elections. However, the administration has been considering limiting fuel exports to lower consumer prices.
In response to the diesel shortage, the Biden administration is exploring various options to replenish U.S. supplies. The National Economic Council Director, Brian Deese, acknowledged that diesel supplies are "unacceptably low" and affirmed that "all options are on the table". The administration is navigating the complex impact of the Russian invasion of Ukraine on global energy supplies and imports, which has contributed to the current supply crunch.
The Biden administration's cancellation of leases and an oil pipeline has been criticised for contributing to rising oil and gas prices. However, it is important to note that prices began increasing before the Russia-Ukraine conflict. The administration has faced scrutiny for its handling of the energy crisis, with critics pointing to the timing of the crisis so close to the midterm elections.
To address the diesel shortage, the United States is set to receive at least two ships carrying a total of approximately 90,000 metric tons of diesel and jet fuel from the United Arab Emirates. This diversion from their original European destinations to the East Coast underscores the administration's efforts to secure additional fuel sources.
While the Biden administration grapples with the immediate challenge of diesel supply, critics have also expressed concern about the outflow of experienced workers from the oil industry and the potential impact on future production growth. The administration's response to this talent drain and its ability to incentivise hiring in the oil sector will be crucial in shaping the long-term outlook for diesel fuel supplies.
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Diesel is the industrial lifeblood of the US
Diesel fuel is the lifeblood of the US, powering everything that enables Americans to eat, drink and live their daily lives. In October 2022, the US had just a 25-day supply of diesel, the lowest level since 2008. This was due to a combination of factors, including seasonal maintenance, the impact of the COVID-19 pandemic, and competition with Europe for energy in the context of the war in Ukraine.
The low supply of diesel has significant implications for the US economy and society. Diesel fuel is critical for semi-trucks, farms, and manufacturing sectors. Without ample amounts of diesel, these industries could be crippled, leading to higher prices for consumers and disrupting daily life. The Biden administration has been accused of not doing enough to address the issue, particularly in the lead-up to the midterm elections.
However, some experts argue that the 25-day figure doesn't mean that the US will run out of diesel. Patrick De Haan, a fuel analyst for GasBuddy, noted that the number changes only fractions of a percentage point each week and is not a day-by-day countdown to zero. The US could only run out of diesel if there were no more diesel production or imports, which is highly unlikely.
The low supply of diesel has already led to surging prices, with the cost of hauling goods, farming, and other diesel-dependent activities increasing. This, in turn, will likely cause prices for consumer goods to rise in the coming months. The National Economic Council Director, Brian Deese, has stated that "all options are on the table" to replenish US diesel supplies, including diverting shipments from Europe and limiting fuel exports.
The situation highlights the essential role of diesel in the US economy and the potential consequences of disruptions to its supply. While the US is not facing an immediate shortage, the low supply of diesel has far-reaching impacts and underscores the need for a secure and stable energy supply.
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Diesel prices are surging
Diesel is critical for hauling goods across the country, with 97% of Class 8 trucks and almost every train in the country depending on it for energy. It is also essential for farming and critical manufacturing sectors. The surge in diesel prices will make the cost of hauling goods, farming, and everything else that requires diesel fuel much higher, causing prices to increase significantly.
The low supply of diesel fuel is a contributing factor to the surging prices. As of October 2022, the United States had about a 25-day supply of diesel, the lowest since 2008. While this does not mean that the country will run out of diesel, as production and imports are not factored into this figure, it is still a cause for concern. The low supply is attributed to several factors, including seasonal maintenance, the lingering effects of the COVID-19 pandemic, and competition with Europe for energy due to the war in Ukraine.
The surge in diesel prices has also led to an increase in cargo theft, particularly in major metropolitan areas such as Los Angeles, Dallas-Fort Worth, Atlanta, and New York City. Criminal enterprises have become more sophisticated in their methods and target selection, and this trend is expected to continue in 2025.
The impact of surging diesel prices is already being felt, with total load activity down 4.2% during the week of January 17, 2025, and spot rates for van equipment in the Truckstop system also decreasing. Flatbed spot rates, however, rose, which is typical during this week. Extreme cold temperatures and a winter storm impacting southern coastal areas could further disrupt transportation and supply chains.
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The impact of the Russian invasion of Ukraine
In October 2022, the United States faced a diesel supply crisis, with stockpiles at their lowest since 1951. Data from the Energy Information Administration revealed that the country had approximately 25 days' worth of diesel supply, raising concerns about the impending shortage. However, experts asserted that the US would not run out of diesel fuel, as the 25-day figure did not account for ongoing diesel production and imports.
The Russian invasion of Ukraine has had far-reaching consequences, including economic and social impacts. One notable effect has been the disruption to global energy markets, particularly in Europe. Russia leveraged its economic power by cutting gas supplies to Europe, causing natural gas prices in Europe to soar. This prompted European countries to seek alternative energy sources and reduce their dependence on Russian fossil fuels. The conflict also impacted global food security, with Russia and Ukraine being major exporters of wheat, corn, sunflower oil, and other agricultural products. The war exacerbated existing food crises in regions like Yemen, Afghanistan, and East Africa.
The US was not immune to the energy market volatility caused by the conflict. Diesel and gasoline prices surged, with diesel's producer price index (PPI) increasing by 109% in June 2022 compared to the previous year. This was attributed to a combination of factors, including refinery capacity constraints and the decision by the US and its allies to stop purchasing energy exports from Russia. The resulting energy crisis contributed to inflationary pressures, affecting the prices of goods and services that rely heavily on diesel for transportation and manufacturing.
To address the energy crisis and mitigate its impact on global food security, the EU implemented several measures. They agreed to phase out their dependence on Russian fossil fuels, with a ban on almost 90% of Russian oil imports by the end of 2022. Additionally, the EU worked to stabilise energy prices and ensure food security for its citizens through initiatives like the Common Agricultural Policy (CAP).
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Frequently asked questions
Yes, according to data from the Energy Information Administration (EIA), the US had about 25 days' worth of diesel supply as of October 28, 2022.
Several factors have contributed to the low diesel supply in the US, including seasonal maintenance, the impact of the COVID-19 pandemic, competition with Europe for energy due to the war in Ukraine, and refinery issues.
Diesel fuel is crucial for industries such as trucking, farming, and manufacturing. A shortage can lead to increased prices for hauling goods and farming, resulting in higher prices for consumers.
The Biden administration has considered limiting fuel exports to lower consumer prices and is exploring various options to replenish diesel supplies.
No, according to experts, the 25-day figure doesn't account for ongoing diesel production and imports. It represents a snapshot of the current consumption and supply, which is constantly being replenished.
