The total inventories of diesel fuel across the entire East Coast have dropped drastically to the lowest levels ever recorded which has caused the prices of diesel fuel to skyrocket to record-breaking levels and putting even further strain on the current economic situation stemming from the ongoing fuel crisis.
Just last week, the levels of diesel fuel along the East Coast have plummeted to the lowest level in well over 30 years since the inception of recording the levels by the federal government, as reported by Bloomberg. The announcement of this shortage has sparked a massive panic throughout the market and caused the prices of diesel to climb to an all-time high. Prices have managed to get up to almost $5.16 per gallon, as reported by GasBuddy, which breaks the previously set record of $5.15 per gallon that was set back on the 10th of March. The overall gap between diesel and gasoline prices has also managed to break another record high by sitting at a $1 price difference per gallon, which breaks the record that was previously set at 98 cents way back in November of 2008. Diesel prices have continued to climb throughout the weekend, reported Bloomberg, managing to rise up to about $5.30 per gallon this past Tuesday. That spike was the 5th consecutive day that a price increase was observed across east coast retail diesel prices. Diesel is already at a point which is up more than 75% since last year.
“While gasoline prices get much of the attention, diesel, which broadly is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel and jet fuel, have plummeted to their lowest level in years,” stated Patrick De Haan, the chief petroleum analyst of GasBuddy, in a press release just last week. “Should distillate inventories fall another five million barrels, which is less than five percent, they will be at their lowest level in nearly 20 years, compounding the problem. There’s no quick solution as the economy has seen a robust turn around, made worse by Russia’s war on Ukraine as the West fences off Russia’s oil.”
The blame has been placed by GasBuddy for these falling inventories has been blamed on “continued escalations” in the Russian invasion of Ukraine, and the overall response from the U.S. and the rest of their more Western allies, seemingly in conjunction with heightened demand from consumers for various products that are normally shipped via trucks, trains, and ships, all of which make use of diesel as a fuel source.
Overall, the refining capacity of the East Coast has dropped by almost half over the course of the last 15 years ago, stated Bloomberg. Over the past 15 years, the total number of refineries working along the Northeast has dropped by half, from 14 down to 7, and quite a few of those refineries are set to work well below their total capacity.
Both Gasbuddy and Bloomberg issued reports that most refiners will be starting to trend more toward jet fuel and diesel production due to the now more favorable market for them, but Bloomberg went on to highlight that do that would end up causing further and a more massive strain on the gasoline market just as the most popular driving season starts.