Energy Company Warns Diesel Situation 'Rapidly Devolving'

Following news that the U.S. diesel supply has sunk below 25 days, Mansfield Energy issued an alert pertaining to shortages in the southeastern region of the country. While no direct reasons were given, the company noted that diesel reserves have been holding at historic lows throughout most of this year. 

“Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast," the company stated. "These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges.”

While fuel shortages and energy deficits have become a global issue, Mansfield Energy has signaled that certain American states will be seeing some problems. The northeastern United States has been the zone enduring the lowest diesel stockpiles throughout most of 2022. But some of that pressure will be shifting around and may create problems for people living in Maryland, Virginia, Georgia, Tennessee, North Carolina, South Carolina, and Alabama. 

"Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility," Mansfield's release stated.

"Mansfield is also moving the Southeast to Code Red, requesting 72-hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels." 

Worried or not, market conditions have benefited the energy sector economically. Despite diesel inventories existing at the lowest levels witnessed since 2008, the profit margin for manufacturing diesel fuel is unprecedentedly high. 

The White House has said it plans on keeping an eye on diesel inventories and is doing what it can to boost supplies. However, earlier attempts did not go as hoped and the United States has continued exporting more diesel fuel out of the country than usual. When President Biden urged the Organization of Petroleum Exporting Countries (OPEC) to increase production, he was snubbed.

This has effectively left the administration dipping into reserves (sometimes just to sell it) and trying to produce more domestically as part of its overarching energy strategy, ironically as it also has to acknowledge its general desire to see the nation move away from fossil fuels on a permanent basis. Unfortunately, reality trumps whatever hypothetical future politicians would like to see. Energy reserves are running out today and are now below a month’s supply where diesel is concerned.

The Saudi Energy minister publicly addressed this after Biden’s trip to Saudi Arabia in July, alleging that the White House intentionally tried to manipulate the price of oil by tapping into those reserves.

"People are depleting their emergency stock and using it as a mechanism to manipulate the market when its purpose was to mitigate shortages of supply," he said. "Losing emergency stocks may be painful in the months to come. Nations shouldn't use emergency oil reserves to manipulate prices.”

Obviously, there’s a bit of malice between Saudi Arabia and the U.S. at present. But that doesn’t make the above statement untrue. OPEC could have increased production to help lower fuel prices (and increase supplies) globally. But they, like Western oil producers, seem to have realized that there’s a lot of money to be made when people are desperate.

However, the situation seems to be worsening at a pace that may be difficult for companies to contend with, especially now that most of the planet is moving into cold-weather months (where heating is a necessity) and we’re beginning to see more regular citizens protesting energy companies in addition to their own government.

Whether you're inclined to blame the Russo-Ukrainian War, OPEC, Western energy companies, or generalized government mismanagement, the reality is that they've all kind of come together to create the horrid situation in which we've all found ourselves. Here's hoping there's a way out and that the remaining diesel fuel gets us through the winter.

[Image: Joe Gough/Shutterstock]

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