US diesel supply is dangerously low
October 26 (UPI) — With gasoline prices a top concern for the White House, diesel supplies are becoming increasingly scarce and could be another source of price issues for consumers, a major U.S. supplier said.
Fuel supplier Mansfield Energy, which delivers more than 3 billion gallons of fuel and related products to its 8,000 customers across North America, said it now requires 72 hours notice to obtain fuel and appropriate freight “because conditions are changing rapidly,” according to the Bloomberg news agency.
Data released Wednesday by the US Energy Information Administration, part of the Department of Energy, shows inventories of distillates – a category that includes diesel – fell by 100,000 barrels in the week ending October 14. This puts US distillate storage levels 20% below. the five-year average for this time of year.
“Sometimes carriers have to visit multiple terminals to stock up, which delays deliveries and strains local trucking capacity,” Mansfield said.
As a result, Mansfield said prices could be around 30 to 80 cents above the market average. Not only does the diesel issue present challenges ahead of the busy holiday shopping season, but it adds to growing inflationary concerns that are building on rising commodity prices.
The Department of Energy, meanwhile, estimates that there is currently only enough diesel available to meet around 25 days of demand. Brian Deese, the director of the National Economic Council, told Bloomberg that supplies were dangerously low and the White House was using all the tools at its disposal to address the problem.
President Joe Biden recently opted to further exploit the country’s strategic crude oil reserves in response to a decision by the Organization of the Petroleum Exporting Countries to cut their production quotas. Deese said that to deal with the diesel crisis, the Biden administration could rely on the one million barrels of diesel stockpiled.
“We looked very carefully at preparing to deploy if needed,” he said.
The latest data shows U.S. refineries were operating at 89.5% of full capacity last week and distillate fuel production actually increased by an average of 5 million barrels per day.
But the supply problem is particularly acute for the East Coast, which does not have the same dense network of refineries as other parts of the country. This makes the region dependent on pipelines.
Bloomberg reports that the Colonial Pipeline, the region’s main source of fuel supply, is fully booked for the delivery of refined petroleum products such as diesel and jet fuel.
Those supplies, however, won’t reach end users until early November.