The United States is grappling with one of the worst diesel shortages in decades, with fuel reserves used for heating and trucks at an all-time seasonal low.
Government data released last week showed the country had only 25 days of diesel supply left, with stocks at records low going back to 1993. In the Northeast, where more people rely on diesel to heat their homes in winter, supplies are insufficient. . The Department of Energy said a third of their levels are typical during this time of year.
The result has been skyrocketing prices that will likely reach consumers who are already facing the worst rise in inflation in a generation.
Diesel prices for November delivery increased by 38%, which is likely to translate into a higher price home heating oil pricesparticularly in the Northeast, according to Andy Lipow, president of Lipow Oil Associates, LLC.
Prices are expected to climb even higher in the coming months with weekly demand rising at its highest point in two years amid more reliance on trucking, farming and heating.
“The national average price for diesel today is $5.30 per gallon and is expected to go up 15 to 20 cents in the next few weeks,” Libow said.
Retail prices are on the rise, too: The average gallon of diesel fuel costs about $5.31, according to AAA data, up 9% from just one month and about 50% from a year ago.
The imperfection stems from a perfect storm of events: when covid-19 pandemic This has shut down a wide swath of the US economy, said Lebow, as well as shutting down most refineries as well as delaying the start of new refining capacity. A weeks-long strike at a refinery in France last month exacerbated the problem, and experts predict that the European Union’s ban on the purchase of Russian crude oil and diesel, which begins later this year, will further affect supplies.
Moreover, a phenomenon known as market underdevelopment — where prices in the near term are higher than in the future — has made building inventory a “foolish task,” Lippo said.
“All of this is happening with low stocks around the world,” he said. The result is a rapid rise in diesel prices.
The Biden administration It raised concerns about diesel fuel shortages as the midterm elections approach and voters are already worried about the state of the economy and painfully high inflation.
The director of the National Economic Council, Brian Dees, told Bloomberg last week that stocks were “unacceptably low” and “all options are on the table” to build up supplies and lower retail prices.
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