Truck diesel shortages threaten to push inflation higher and send the supply chains into a tailspin.
The economic forecast heading into the dead of winter appears bleak, after the Energy Information Administration (EIA) issued an alert that diesel inventories are at their lowest since 2008 at roughly 106 million barrels. Unfortunately, drained reserves and uneven prices at the pump are only the bad news. The worse news, according to the EIA, is that stockpiles of truck diesel, jet fuel, and home heating oil are at the lowest in any October ever recorded.
“In the U.S., distillate fuel inventories are about 20 percent below the five-year average for this time of year, according to the EIA’s latest weekly inventory report. The U.S. has just 25 days of diesel supply in reserve, with some regional markets very tight,” according to Oil Price.
Rick Todd, CEO of the South Carolina Trucking Association, indicated a root cause of the diesel shortage stems from alternative energy policies. The Biden Administration has essentially declared war on fossil fuels, prompting higher prices and depleted inventories.
“We should, as a country, take a longer-term view, do everything we can, put everything on the table. But in the meantime, stick with what works until you can replace it, and then make sure that when you do replace it, that it’s scalable,” Todd reportedly said. “Nobody wants to be force-fed any alternative technologies or anything until they’re done. So, I think we put ourselves in this situation unnecessarily.”
The hard numbers support conclusions that anti-fossil fuel policies are wreaking havoc across diesel, jet fuel, and home heating oil stockpiles. The weekly data compiled by the EIA shows that national inventories were above 160 million barrels in January 2021, when the change in administration occurred. National inventories are currently down 54 million barrels.
Hundreds of billions of taxpayer money from the Infrastructure spending bill have been funneled into electric vehicles and charging stations, not oil production. Congress and the White House have also funded the manufacturing of semiconductor chips domestically. By contrast to the previous administration, the Department of the Interior slow-walked oil drilling permits, shrunk public land usage, and ratcheted up costs. Adding insult to injury, oil refineries have shuttered and U.S. capacity plummeted.
“U.S. refining capacity is now lower than it was before Covid, as operable refinery capacity shrank in 2021 for a second consecutive year to stand at 17.9 million barrels per calendar day as of January 1, 2022, according to EIA estimates. U.S. refiners permanently shut down some refinery capacity at the start of the pandemic when fuel demand plunged, while others closed facilities to convert them into biofuel refineries,” according to Oil Price. “In addition, the U.S. banned imports of all Russian energy products after the Russian invasion of Ukraine and hasn’t imported any petroleum products from Russia since April. The world is also scrambling for diesel supply also in view of the looming EU embargo on Russian fuel imports by sea, expected to kick in in early February.”
Sources: forbes.com, oilprice.com, foxbusiness.com, ccjdigital.com
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