Bad News About the U.S. Diesel Supply

Matt Posky
by Matt Posky

Over the summer, the United States witnessed record fuel prices. But the elephant in the room wasn’t how much people were having to pay for regular unleaded gasoline, it was the possibility that the nation might run into diesel shortages going into the fall.


Global deficits had manifested in March and people who watch the market professionally were growing increasingly concerned. By September, it began to look like the U.S. had dodged that particular bullet. However, the Energy Information Administration (EIA) recently announced that America only has about 25-day supply during a period of elevated demand. 


The present national average for diesel fuel is around $5.34 per gallon – up from $1.67 per gallon this time last year – which had already risen dramatically against 2020. That is unfortunate but it doesn’t become a genuine crisis until you also take into account that the 25-day supply (give or take) represents the smallest U.S. stockpile since 2008. Under normal circumstances, America usually has somewhere between 35 and 55 days worth of fuel to work with. 


Viewed broadly, this will assuredly mean higher shipping costs and retailers raising their prices to make up the difference. Farming and construction costs are also being impacted. Though the situation changes somewhat depending on where you’re filling up your tank. The East Coast has endured sustained shortages for most of the year and saw diesel stockpiles in the 14-day range back in May. However, the highest prices have been in California, where diesel is rarely sold for less than $6.50 per gallon these days. 


If you’re wondering what’s causing the problem, there’s a laundry list of reasons we could go through. We’ve entered into refinery maintenance season and colder weather means at least some of the fuel will be used for heating, further increasing demand. U.S. refineries have also tamped down diesel production generally while exporting more of it out of the country than usual. Some of this was due to the sudden change in regulatory measures after the Biden administration got involved, upending oil production and refinement schedules in 2021. But the Russo-Ukrainian War has likewise driven up demand globally and harmed production as energy prices skyrocket in Europe. 


While absolutely terrible news for most people, American oil refiners are now seeing the best diesel margins in recorded history. The profit for transforming a barrel of crude into a barrel of diesel is now $86.50. That’s up by roughly 450 percent against the 2000-2020 average of just $15.70 per barrel, according to OilPrice.com.


On Wednesday, National Economic Council Director Brian Deese told Bloomberg TV that diesel inventories had become “unacceptably low” and “all options are on the table” to build supplies and reduce retail prices. The outlet later noted that there are at least two tanker ships carrying around 1 million barrels of diesel that have been redirected from Europe to New York, suggesting they may offer America some relief going into November. Delta Air Line’s Trainer refinery in Pennsylvania is also wrapping up its seasonal maintenance, meaning more regional production. 


But it’s still a bad situation and one that cannot be remedied overnight. Expect high energy prices through the rest of the year (at a minimum) and for high fuel prices to influence the amount you have to pay for just about everything else.


[Image: Robert V Schwemmer/Shutterstock]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Kcflyer Kcflyer on Oct 27, 2022

    Well said Matt!

  • UncleAL UncleAL on Nov 30, 2022

    "The present national average for diesel fuel is around $5.34 per gallon – up from $1.67 per gallon this time last year" is a resounding reason for "Let's Go Brandon" or the "FJB" chorus.....stupidity and incompetence goes a long way to destroy the country !

  • Kwik_Shift_Pro4X As much problems as I had with my '96 Chevy Impala SS.....I would love to try one again. I've seen a Dark Cherry Metallic one today and it looked great.
  • Susan O’Neil There is a good reason to keep the Chevrolet Malibu and other 4 door family sedans! You can transport your parents and other somewhat handicapped people comfortably and safety! If someone can stand and pivot you can put them in your car. An armrest in the back seat is appreciated and a handle above the door! Oh…and leather seats so your passenger can slide across the seat! 😊Plus, you can place a full sized wheelchair or walker in the trunk! The car sits a little lower…so it’s doable! I currently have a Ford Fusion and we have a Honda Accord. Our previous cars were Mercury Sables-excellent for transporting handicapped people and equipment! As the population ages-sedans are a very practical choice! POV from a retired handicapped advocate and daughter! 😊
  • Freddie Remember those ads that say "Call your doctor if you still have...after four hours"?You don't need to call your doctor, just get behind the wheel of a CUV. In fact, just look at one.I'm a car guy with finite resources; I can't afford a practical car during the week plus a fun car on the weekend. My solution is my Honda Civic Si 4 door sedan. Maybe yours is a Dodge Charger (a lot of new Chargers are still on dealer lots).
  • Daniel J Interesting in that we have several weeks where the temperature stays below 45 but all weather tires can't be found in a shop anywhere. I guess all seasons are "good enough".
  • Steve Biro For all the talk about sedans vs CUVs and SUVs, I simply can’t bring myself to buy any modern vehicle. And I know it’s only going to get worse.
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