Sorry! Diesel prices are likely to climb again soon
Behind the scenes of why fuel is so expensive in 2022
For today’s MODES, I called up FreightWaves Editor-at-Large John Kingston to find out what the heck is happening with diesel prices recently. I learned a lot, but the most important takeaway was the World Oil Market Waterbed Theory.
This conversation was lightly edited and condensed for clarity.
FREIGHTWAVES: Just to start off pretty broad, the macro conditions are pretty much the same from what we saw earlier this year to what’s happening now. Obviously, we haven’t built any new refineries in the past few months. There’s still a war in Ukraine. Why is it that future prices are going down, and maybe not as quickly, but retail gasoline and diesel prices are also going down?
KINGSTON: “It’s a good question because it’s not really clear. I think part of the reason is that the news reports continue to trickle out about Russia doing relatively well in finding new buyers for its crude oil. Whereas, the International Energy Agency had predicted a couple of months ago that the loss of Russian supplies was going to be about 3 million barrels a day, which is roughly about 3% of the world market — which is a lot when you lose that much supply.
“I’m going to date myself with this reference, but it’s the best I can do. The world oil market is like a waterbed. If you push down one corner of the waterbed, the water moves throughout the entire mattress. If Russia is actually finding buyers for its oil that maybe had gone to Europe previously, but the oil is instead going to India or China, it’s the same as it getting out to its normal places…
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