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Spotlight: The Diesel Fuel Crunch

SPOTLIGHT: THE DIESEL FUEL CRUNCH

SPOTLIGHT: THE DIESEL FUEL CRUNCH

PRICE OF DIESEL FUEL SETS RECORD 

While gasoline prices have risen 14 percent so far this year, diesel’s price has shot up by 50 percent to a record $5.35 a gallon, according to the American Automobile Association.

As of 17 November, the U.S. average price of diesel was $1.61 more than that of gasoline; a year earlier, the difference was 23 cents, The Wall Street Journal noted.

Diesel is more expensive than gas because of the additional steps involved in refining clean versions of it from crude oil and because it carries higher taxes.

Also as of last week, the U.S. had only a 25-day reserve of diesel, the least since 2008, the U.S. Energy Information Administration reported.

The shortage is due to the Ukraine war and Western sanctions; unlike Russia’s crude oil exports, its diesel shipments have fallen sharply because of the conflict.

Also, Russia has cut off virtually all natural gas supplies to Europe, forcing electricity generating plants there to shift from gas to diesel as fuel, spiking demand for shrinking supplies.

In addition, an unusually cold winter and hot summer in North America hiked natural gas prices when demand jumped. Oil refineries, which are fueled by natural gas, cut gas use when their fuel’s price leaped.

China’s heat waves this year were related to blackouts, leading Beijing to cut exports of oil and related products to protect domestic supplies.

The diesel shortage also is partly a byproduct of the COVID era.

During the COVID War, demand crashed for transport fuels. As a result, some U.S. refiners permanently shuttered older plants and have not found it economically feasible to start them up again, in part because expensive equipment upgrades would be required.

Also because of the war, U.S. refiners have been shipping diesel to Europe to help ease its fuel shortage. The shortage has lifted diesel prices there well above what they are at home.

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