A restriction on Russian imports is causing US diesel shortages to expand along the East Coast, increasing concerns about additional increases in fuel costs as consumers get ready for the winter heating season.
One of the largest gasoline distributors in the country, Mansfield Energy, took emergency steps on Tuesday and informed its clients that transporters were sometimes had to visit numerous terminals in search of supplies, which was delaying delivery. The firm recommended consumers to offer 72 hours’ notice for orders in order to avoid paying above-market costs as shortages moved from the Northeast to the Southeast.
According to Mansfield, which supplies more than three billion gallons of oil products a year, “real gasoline prices are presently 30-80 cents higher than the quoted market average since supply is constrained.” As the comparatively cheap suppliers of diesel run out, distributors are compelled to purchase it from more expensive sources, which leads to exceptionally broad price gaps.
Just six days before to Mansfield’s warning, Brian Deese, head of the US National Economic Council, told Bloomberg News that the availability of diesel was “unacceptably low” and that President Joe Biden’s administration had “all options” open to lower costs. However, it’s unclear how such solutions would offer long-term relief, as Bloomberg and other media sources have pointed out.
According to reports, diesel supplies in New England, the US area most dependent on distillate fuels for heating, are now only about one-third what they usually are at this time of year. Only 25 days’ worth of fuel is now available in the US, the lowest quantity since 2008.
According to Deese, the US has access to one million barrels of diesel stored in its Northeast Home Heating Oil Reserve, which may be used in an emergency. However, as the Washington Post reported, the Northeast’s high demand for the gasoline would cause those supplies to run out in less than six hours. The White House has also thought about prohibiting or limiting the export of refined fuels, a move that industry trade associations argued would be counterproductive.
The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers wrote to US Secretary of Energy Jennifer Granholm earlier this month stating that “banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate US allies during a time of war.”
If there is an interruption in the supply, such a refinery malfunction, the shortages also put the US at danger of future price increases. Because roughly 70% of the nation’s freight tonnage is transported by 18-wheelers and other diesel-powered vehicles, higher fuel prices would have a negative impact on the US economy.
According to the AAA car club, nationwide diesel prices are presently averaging around $5.32 per gallon, which is an 8.6% decrease from the record high reached in June. In contrast, the cost of gasoline has decreased 25% from its record high to an average gallon price of $3.76. Diesel costs have increased 47% since last year.
