The Biden administration has been focusing on crude oil and gasoline prices, but in the meantime, diesel inventories have fallen to dangerously low levels
supplies remain at the lowest seasonal level for this time of year everjust 25 days of diesel supply, the lowest since 2008;
The historic diesel crunch comes just weeks ahead of the midterm elections and will almost certainly drive up prices for consumers who already view inflation and the economy as a top voting issue. Retail prices have been steadily climbing for more than two weeks.Wholesale diesel prices in the spot market of New York harbor, a key pricing point,. Excluding a brief interval from late April into mid-May, that would be a record high.
This isn’t all that surprising. as we have been warning all year, the American diesel market has been in crisis mode for most of 2022; if only others had caught on this crisis may have been averted.and national stockpiles have drained as refiners entered maintenance season and as Russia’s war in Ukraine tightened global supplies and limited imports.
If inventories decline between October and April by their 20-year average of about 25 million barrels,. That, according to Blas, is an unlikely scenario, however: The oil market would try to keep inventories from falling that much, with prices rising high enough to slow the economy, curtailing demand. Over the last 40 years, American diesel inventories have never dropped below 85 million barrels, even at the end of the heating season.
If the White House opts to intervene, the less harmful measure would be to release a small reserve of diesel that the government keeps for emergencies . The Northeast Home Heating Oil Reserve only has one million barrels, so it would be, at best, a Band-Aid. But it’s better than nothing, and Biden should order its release. For those asking,
Another option is forcing oil companies to build up stocks quickly ahead of the winter by setting a minimum inventory level, similar to what the European Union did for natural gas stockpiles. US officials are particularly worried about the northern part of the US East Coast, where inventories are low both seasonally and in absolute terms. The region, known in the industry’s jargon as PADD1A, is where the greatest demand is: Of the roughly 5.
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