why is there a diesel shortagewhy is there a diesel shortage

why is there a diesel shortage28 May why is there a diesel shortage

refining margins because gas is a key input into our refining process. The U.S. Europe was a net importer of diesel, consuming upwards of 6.8 million barrels daily. dire situation at home. But the relatively small volume available in these reserves mean the relief won't last for very long. Can The Oil And Gas Sectors Deliver On Their Decarbonization Promises? Saudi Arabias making $1 billion from #oil exports every day. So, while there are certainly supply chain problems and increased diesel prices in the U.S., its unfounded to say that the country is running out of it by Thanksgiving, or that were on the verge of a massive shortage. Francisco Blanch, Bank of America global research head of global commodities and derivatives research, talks about . Is that correct? Inflation is Going to Get Worse. If the fuel scarcity gets worse and has the potential to drive inflation, in a worst-case scenario for consumers, daily life becomes increasingly expensive while in the middle of a recession that's supposed to suppress demand and cool inflation. The shortage had been caused by climate protests blocking major fuel depots, exacerbating existing supply issues due to increased demand post-Covid lockdowns and Russia's invasion of Ukraine By. Merchant of Record: A Media Solutions trading as Oilprice.com, Long $ibm International Business Machines. Diesel Gas Shortage: What Stocks Are Impacted By A Diesel Gas The price reached $4.90 a gallon in early November, about double year-ago levels. Why Is There A Diesel Fuel Shortage In 2022? - Truck Vin Kloza said it is the middle of the barrel diesel that. maybe take a little longer than we expected. Start Trading CFDs Over 2,200 Different Instruments, China Launches Asias Biggest Coal Carbon Capture Plant. All Rights Reserved. First, domestic supply was hit after the Biden administration banned the imports of energy products from Russia. Backwardation and contango are names for curve structures that map traders guesses about what a given contract will be worth in the future. Well, look, I mean, I think one one very important message is, you know, As mentioned above, distillate demand spikes at this time of year. On October 28, Fox News host Tucker Carlson spent his entire opening monologue (over 13 minutes) blaming President Joe Biden for high energy prices, promoting fossil fuel usage, and insinuating that the U.S. will run out of diesel fuel by Thanksgiving. (The primary distillates are diesel, jet fuel, and heating oil). Florida gas prices rose 12 cents per gallon to start the month. Are 529 plans worth it? As mentioned above, distillate demand spikes at this time of year. However, in 2008 distillate levels were low coming out of spring. Republicans don't support this decision, with Sen. Steve Daines writing in a letter to Biden, "Manipulating energy reserves to bring gas prices down from historic highs as the midterm elections approach is not an accomplishment, it is a national security risk.". XU: Yeah, that is accurate. Thus, a low distillate inventory in late April 2008 isnt quite as serious as a low inventory in October 2022. Before joining Reuters in 2008, he was a trading analyst at Sempra Commodities, now part of JPMorgan, and an economic analyst at Oxford Analytica. Remember, high gas prices hurt refining, Even as the U.S. grapples with one of the worst diesel shortages on record, U.S. companies are exporting more than a million barrels of distillates a day. Now, crude exports to Europe from the United States are the highest theyve been since 2016, with almost 49 million barrels exported in April alone. Companies dont want to risk sending a shipment of diesel only to find the per-gallon price has dropped in the time it takes to get to its destination. With prices surging worldwide for heating oil, natural . Right now, traders are paying more for prompt deliveries than longer-term ones. What exactly is diesel, and why is it so important as an energy source? On the East Coast, West Coast and - we've done some research recently in swing states where the decision on who gets control of Congress is particularly crucial. Is that accurate? Additionally, their attempts to blame Biden for diesel problems are part of their entirely false narrative claiming the Biden administration is waging war on the U.S. fossil fuel industry. So, refinery capacity drops at this time of year. In addition to Fox News, Fox Business Channel and Newsmax have also been mentioning a looming diesel catastrophe. Column: U.S. diesel shortage starts to ease Why Is There a Diesel Shortage? Plus Price Predictions MARTIN: So I can imagine that this is a very difficult issue for the Biden administration. And that's because, again, similar to diesel, inventories are very low. Gas and diesel are refined from crude oil and higher crude oil prices eventually lead to a rise in gas and diesel prices as well. That's problematic because Port Everglades is the entry point for 12.5 million gallons a day of energy products, from jet fuel to gasoline to diesel, for 12 Florida counties. Will There Be A Diesel Shortage? Distillate demand generally spikes in spring when farmers are planting crops and in fall, when they are harvesting those crops and people start buying fuel oil for winter. Refineries on the East Coast had to scale back due to staffing issues, and it can take several months and up to a year to have them operating at pre-COVID levels. Mansfield Energy identified the most acute shortages to be in these seven states: These seven states have been given an Alert Level 4 by the fuel supply company "to address market volatility," while the entire Southeast was moved to Code Red, which requires a 72-hour notice for fuel deliveries when possible "to ensure fuel and freight can be secured at economical levels.". Higher diesel demand usually signals strong economic activity. AP'S ASSESSMENT: False. And why is that? Third, U.S. refinery capacity has fallen in the past few years as several unprofitable refineries were closed. https://t.co/AnawgIxL06 pic.twitter.com/mYwfj04r3C. Thus, a low distillate inventory in late April 2008 isnt quite as serious as a low inventory in October 2022. And will we see something like this happen to gasoline? Currently, there are only . In addition, the US gasoline market is also backwardated, about three times as much as it was this time last year. Some might try to ride out the wave and absorb the costs, even though fuel prices might see some drivers at risk of breaking even or experiencing losses. MARTIN: Well, if it's such a critical energy source, how did we get here? XU: Yeah. Even if you don't use diesel yourself, you're obviously affected by it, right? That means that when bulk traders go to pull their inventories, they may not find much left in the tank. You may opt-out by. But the fuel supply chain is dynamic, and suppliers will rally to fill in any gaps in supply," the company said. Unabated by these facts, Carlson again pushed the idea of an imminent diesel catastrophe in a segment on November 3. Record diesel prices, tight supplies could be next blow to the US So do they have any options here? (The primary distillates are diesel, jet fuel ,and heating oil). But, it does . But building up government supplies out of domestic production may reduce exports and drive up global prices further. Our Standards: The Thomson Reuters Trust Principles. A diesel gas shortage impacts many companies since the fuel is needed to transport goods across the country. But I don't expect it to be anywhere near to the Colonial Pipeline outage in 2021. The East Coast used to have over a dozen refineries, which was more than enough to handle the regions oil processing requirements. This year, that never happened. We Must Get Back to Basics, This Pride, Brands Need to Stand by the Trans Community, China and Russia's Growing BRICS Bloc Speeds Decline of U.S. natural gas prices globally. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. And supplies are going to tighten further over the next few months because Europe is going to pivot away from Russian fuel more so than they have done with their embargo coming in the next few months. "This year, however, the East has less than 25 million barrels on hand. There are four factors, but two of those factors are in play every year. There are four factors, but two of those factors are in play every year. So whats going to happen then? 7. document.write(write_html); I know of no government agency predicting the country will run out of diesel by Thanksgiving. GasBuddys Patrick De Haan agreed, calling it completely inaccurate that the country will run out of diesel fuel in 25 days. All of this has led to what many analysts have called a diesel shortage, which has caused prices for the distillate fuel to skyrocket. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Is there a diesel fuel shortage coming? Are we going to run out? The loss of those Russian imports have caused problems for refineries as they struggle to fill holes in their product slates. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Visit our website terms of use and permissions pages at www.npr.org for further information. Three Reasons There's a Diesel Shortage in the US - Bloomberg 06/01/23 10:09 PM EDT, Video & Audio Wednesday 31 May 2023, 1:36pm. Climate & Energy. However, in 2008 distillate levels were low coming out of spring. - Recession . And diesel is so deeply embedded in American life that its consumption is often seen as a barometer of the country's overall economic activity. just days of diesel supply. As a result, retail diesel prices including applicable taxes are now $1.45 per gallon higher than for gasoline, a record premium, up from just 24 cents per gallon a year ago. In June, diesel reached a record-high average price of $5.703 . 06/01/23 1:44 PM EDT, Article The diesel shortage so far is manifesting itself in the form of sky high prices, not widespread outages or limits on purchases, said Kloza. At the same time, really hurt. Hosted by Emily Chang. This backwardated market structure incentivizes suppliers to sell now instead of holding onto the product -- the opposite of what President Joe Biden wants them to do. This is also false. Debt ceiling fallout puts U.S. credit rating in limbo. But so I think I think we've lost about They tend to do that in the spring and fall, which is when demand is lower and the weather is decent. Farmers are burning the fuel to harvest crops, residents of the Northeast are filling up their heating oil tanks before prices rise even more and trucks moving goods on the countrys highways have geared up ahead of the holiday shopping season. So essentially that's gas. A shortage of diesel fuel is spreading across the United States, with one company launching an emergency delivery protocol, requesting a 72-hour advance notice from clients to be able to make the . Not only was the spread unusually large, but the backwardation had lasted unusually long: Typically the diesel market flips into contango in the summer, allowing suppliers to replenish fuel ahead of peak harvest and heating season. Four Reasons Why The U.S. Is Grappling With A Diesel Shortage Farming and heating also relies on diesel. But the primary reason is the cutoff of Russian imports. In the former, the curve is downward sloping, meaning prices are expected to fall in the future; in the latter, its the reverse and upward sloping. This could prevent the winter-time stockbuilding that typically happens, raising the risk of a thinner-than-usual supply cushion going into spring. He began the segment by saying, According to the Energy Information Administration, the United States is about to run out of diesel fuel. But its a relatively small amount (e.g., ~5% in a refinery I once worked in). available supplies. MARTIN: And also, some parts of the country, is it accurate to say that the prices still haven't eased in some parts of the country? According to data from the Energy Information Administration, by the Monday of Thanksgiving week thats 25 days from now there will be no more diesel. Diesel supplies have also tightened due to a steady decline in East Coast refining capacity in recent years, which has made the region more reliant on overseas imports, some of which come from across the Atlantic -- Europe and Russia. Wars can impact more than the countries directly involved in them, and were finding that out with the ongoing conflict between Russia and Ukraine. XU: The Biden administration has a large toolbox, but they're filled with some pretty blunt instruments. Our supply of diesel will be exhausted in less than a month., Similar to his language on November 3, Carlson stated on October 28, Thanks to the Biden administration's religious war in Ukraine, this country is about to run out of diesel fuel. Here are some of the steps available: The administration could release 1 million barrels of fuel from its strategic fuel reserves in the Northeast. While prices are skyrocketing in the Northeast, diesel outages are concentrated in the Southeast. These low distillate inventories are why diesel prices are above $5.00 a gallon nationwide, even though the nationwide average price for gasoline has dropped below $4.00 a gallon. (Photo by Peter Dazeley/Getty Images), Inside The Crazy $6 Billion Plan To Turn Wind Into Gasoline, ExxonMobil, Nucor Ink Big Carbon Capture Deal. And this matters even if you don't use diesel yourself, because it's an essential part of the supply chain. Securing Asias Energy And Natural Resources Future, Innovation Fuels Nuclear Energys Revival, But Challenges Remain, Hydrogen Is Ramping Up In The Energy Transition, But It May Be Oversold, Rail Bill Would Increase Energy Costs, Bureaucracy, Bidens Green New Regulatory Agenda Runs Afoul Of The Supreme Court. Diesel inventories in the U.S. have not been so low since 2008, with the Energy Information Administration (EIA) reporting that, as of October 14, the country had 25.4 days left of distillate supplieswhich include diesel, jet fuel and heating oil. again, Europe is essentially trying to sanction Russian imports of diesel. (Photo by Brandon Bell/Getty Images). And winter hasn't even begun. They are relying on U.S. exports to help ease their fuel burdens headed into winter. About 59% of Atlanta's stations were reported empty. Pride Has Been Taken Over by Radical Activists. Consumers globally have been grappling with shortages of daily-use goods. Diesel stockpiles in the U.S. are reportedly at their lowest point since 2008, with only enough fuel for a 25-day supply, according to a recent report from Bloomberg.Demand is also said to be at . we've been arguing is commodities are in a good situation somewhere in a bad And then the third factor really on the on the supply side, which has been a big And suppliers are rationing fuel and initiating emergency protocols. The US has only a 25 day supply of diesel fuel. Saudi Arabia buys up Russian diesel, sells more of its own That also means that if refiners do shift production, that also potentially creates shortages in the gasoline market. Rebalancing diesel supply will likely require a further rise in interest rates and tighter financial conditions in the United States and other major economies to reduce fuel consumption to more sustainable levels. Diesel fuel is in short supply as prices surge - CNBC Related Diesel Fuel Shortage Update as Supply Increases in Time for - Newsweek It is a huge problem, and in fact, if you look across the commodity spectrum, These low distillate inventories are why diesel prices are above $5.00 a gallon nationwide, even though the nationwide average price for gasoline has dropped below $4.00 a gallon. The main reason is mentioned above but is light on analysis. including diesel. 06/01/23 8:17 PM EDT, Video & Audio But Patrick De Haan, GasBuddy's head of petroleum analysis, told Newsweek he would be more cautious before saying outages are incoming. Reflecting the intensifying fuel shortage, futures prices for ultra-low sulphur diesel (ULSD) delivered in New York Harbor in December are trading at a premium of $60 per barrel over Brent. And again, the lack of refining capacity, a summer of drawdowns - suppliers were unable to build up supply because of a backward-dated market structure that incentivizes people to sell now instead of holding on to fuel. People are unable to fill up their tanks. That could help the region in a pinch, but the relatively small volume available in the diesel reserve means the relief wont last very long: At the current national demand level, 1 million barrels of fuel will be gone in less than 6 hours. Direct, Streamlined, And Efficient Service With Prompt Payment Made A Priority. NPR transcripts are created on a rush deadline by an NPR contractor. Distillate inventories were a massive 26 million barrels (-20% or -1.94 standard deviations) below the seasonal average for the previous ten years (Weekly petroleum status report, EIA, Oct. 26). Not to mention that parts of the U.S. on the East Coast and West Coast do rely on international imports that will become more expensive. Its hard to argue that it wouldnt, but it would exacerbate the crisis elsewhere. Market Realist is a registered trademark. And particularly on the East Coast, where supply is tightest and most reliant on foreign imports, the risk of actually running out of fuel is higher than ever because stockpiles in the region have been at record lows since April for diesel and a decade low for gasoline. So when diesel gets expensive, everything costs more. U.S. facing diesel shortage, prices likely to spike - KWCH Prior to Russias invasion of Ukraine, the U.S. was importing nearly 700,000 barrels per day (BPD) of petroleum and petroleum products. She covers the oil industry, especially refined products, for Bloomberg. I t cost Carl Smith . My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril. So that's not helped either. The other obvious question which I am often asked is why we dont ban companies from exporting fuel during a fuel crisis? Programs Europes already strained market is also set to come under further pressure when European Union sanctions on seaborne deliveries from Russia -- the regions single biggest external supplier -- begin in early February. Waiving the century-old Jones Act would make shipping diesel fuel to the East Coast more economical and possibly more profitable than exporting it. 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A lot of 'bending' is going on behind the scenes, there are significant challenges, primarily in the Northeast. Well, everything will stop. Tucker ended his monologue by looping back to the supposed diesel calamity, stating that we have 25 days to avert economic catastrophe.. Overall, it has been a perfect storm for diesel. Keep in mind that there may have been multiple reasons why someone might have used the word "shortage" combined with the name of a product like "avocado" or "diesel" in a Google search. While data from the Energy Information Administration shows that the U.S. has about a 25-day supply of diesel, the country will not actually run out of fuel soon, experts confirmed to The Associated Press.

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