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Diesel fuel prices have increased ~50% this year to $5.35/gallon, a record high compared to gasoline and crude oilin another example of how globalized energy market disruptions are creating price shocks and potential shortage.
The spread between diesel and gasoline has widened to an all-time high of $1.61 a gallon from a spread of just $0.23 a year ago, according to the report. The Wall Street Journal; The US has just 25 days of diesel stockpiles, the lowest level since 2008, according to the Energy Information Administration.
High prices are hitting businesses from mining and manufacturers to distributors and retailers, who are paying record amounts to ship goods; Meanwhile, refiners are reaping record profits and Valero Energy shares (NYSE:VLO), Petroleum Marathon (NYSE:MPC) and Exxon Mobil (NYSE:XOM) has increased by more than 80% compared to the beginning of the year.
US diesel inventories have been on a downward trend since the summer of 2020 and are now ~10% below their five-year low, but the figure is 40% in the northeast.
The current domestic diesel deficit is mainly driven by exports, particularly to Europe, where diesel is typically more expensive and legal restrictions on the types of ships that can transport fuel between countries. location in the United States adds to the cost of encouraging overseas sales.
East Coast diesel and heating oil stocks now stand at 25 million barrels, and Macquarie strategist Vikas Dwivedi says WSJ that an average winter would drain them by ~20 million barrels, but a particularly cold winter “could easily drain 23, 24, 25 million barrels and that’s all you have.”
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Such terrifying statistics are behind the growing chatter from the Biden administration force a limit on US fuel exports.
