Recent headlines have drawn attention to a shortage of diesel fuel across the country. The number of days of current supply has dropped to 25 amid problems with petroleum transportation and shuttered U.S. refineries.
RVers might experience shortages of retail diesel fuel in the weeks ahead, particularly in the Eastern and Southeastern regions of the country. Prices will be high across the continent.
According to the U.S. Energy Information Administration (EIA), stocks of diesel fuel and other distillate fuel oils were down to 106 million barrels as of October 21, 2022, which the agency says is the lowest for the autumn season since it began collecting data in 1982.
Are we “running out” of diesel?
Yes and no.
Some pundits point to the dwindling supply as an indication that the fuel supply will be exhausted by the end of November. The practical reality is that there are increasing shortages of diesel fuel. In contrast, the diesel fuel supply will trickle out at some level if refineries continue to process crude oil for domestic consumption. But according to the EIA’s Weekly Petroleum Status Report dated October 26, 2022, distillate fuel inventories were 26 million barrels (-20% or -1.94 standard deviations) below the seasonal average for the previous ten years.
The shortages are wreaking havoc with wholesale and retail deliveries of diesel and home heating fuel. One supplier, Mansfield Energy Corp., a major fuel supplier in the Southeastern U.S., has notified clients that it will require 72 hours’ notice for fuel deliveries.
“At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity,” Mansfield Energy said in its message to clients.
John Kemp, senior marketing analyst for Reuters, wrote in Reuters Business News on October 27, 2022, “Stabilizing then rebuilding inventories to more comfortable levels will require a significant slowdown in freight movements and manufacturing activity. A deeper and more prolonged slowdown in the United States, Europe, and Asia will be needed to boost inventories significantly.”
What caused the nation’s diesel fuel crisis?
A perfect storm
A perfect storm of factors has substantially impaired the diesel fuel supply. The COVID-19 pandemic temporarily reduced the demand for fuel. At the same time, the Biden Administration was shutting down petroleum pipelines; pressuring producers, resulting in refinery shutdowns; and imposing a ban on imports from Russia, a major supplier of petroleum to the distillate fuel market. The result is shortages and high prices. In addition, during the mid-point of the pandemic in 2021, five U.S. oil refineries closed. Producers shuttered a total of nine refineries from 2020 to date. U.S. refinery capacity has declined by more than 1 million barrels per day.
Supply and demand have driven prices higher at the pump, on average $5–$6.50 per gallon across the country. Shortages and high prices exacerbate an already acute U.S. supply chain problem.
Will the flow of diesel fuel stop this month or next? Probably not. But supplies will be short, delivery times will be longer and, of course, prices will be higher.