Diesel Fuel Shortage Update as Supply Increases in Time for Holidays

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Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property insurance market, local and national politics. She has previously extensively covered U.S. and European politics. Giulia joined Newsweek in 2022 from CGTN Europe and had previously worked at the European Central Bank. She is a graduate in Broadcast Journalism from Nottingham Trent University and holds a Bachelor's degree in Politics and International Relations from Università degli Studi di Cagliari, Italy. She speaks English, Italian, and a little French and Spanish. You can get in touch with Giulia by emailing: g.carbonaro@newsweek.com.

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U.S. diesel stocks continue to increase after an October report from the Energy Information Administration (EIA) saying that the country had 25.4 days of distillate fuel left in storage sparked concerns over a possible slowdown of the country's economy.

"Stocks continue to increase, rising 3.5 million barrels last week to 29 days of supply, up from the low of 25.4 days in October," GasBuddy's head of petroleum analysis Patrick De Haan told Newsweek.

Diesel refineries U.S.
An oil barge is offloaded at Stuyvesant Fuel Service, a 22-million gallon capacity deep-water oil terminal, June 10, 2008 in the Bronx borough of New York City. Diesel inventories have been growing in the U.S.... Mario Tama/Getty Images

According to the EIA, the total supply of distillate, which includes diesel, has gradually increased from 25.4 days as of October 14—the lowest level since 2008—to 29 days on November 25, the latest date available.

The number of days left in stock used by the EIA refers to the amount of distillate fuel the country has in storage and could rely on in the unlikely scenario in which all U.S. refineries were to shut down—but does not include the total amount of distillate fuel that the country imports from abroad, or the sum in production.

Despite the consistent growth in diesel stocks since October, the amount of this fuel in storage in the U.S. is lower than it used to be in previous years. For example, on November 27, 2020, the U.S. had 35.9 days left of diesel supply in storage.

The supply crunch is down to a combination of factors, including the Russian invasion of Ukraine and the energy crisis this has triggered, especially in Europe; the closure or repurposing of several refineries in the U.S. since 2020; increased demand; and the fact that refineries are just coming out of maintenance season.

All of this has led to what many analysts have called a diesel shortage, which has caused prices for the distillate fuel to skyrocket. In June, diesel reached a record-high average price of $5.703 a gallon.

But, just as stocks have been boosted since the October low-point, so prices have started to decline: diesel was $4.967 per gallon on December 5, according to the EIA, down $0.174 from November 28, when it was priced over $5.

"It's a pretty notable drop in a week," De Haan said, adding that it's hard to say how this change in diesel price will affect stocks.

"If prices remain high, supplies will likely continue to recover," he added. "Refiners had been struggling to meet demand, but with maintenance now over, they're better able to produce enough diesel to power the economy."

The EIA said on November 8 that it expects diesel prices to remain high through early 2023 as demand for the fuel typically increases in the cold season.

In a press release, the agency said that diesel prices will remain higher than $5 per gallon for the remainder of 2022, and bills for homes that use heating oil will increase by 45 percent this winter season, compared with those at the same time in 2021.

"Inventories are just one part of the supply equation for diesel and other distillates," said EIA administrator Joe DeCarolis.

"The distillate fuels in storage aren't the only source of diesel we have to keep trucks and trains moving, but lower-than-average storage levels will contribute to higher costs for diesel and for heating fuels through the winter."

Diesel helps running the global economy, as it is used in farming, construction, heating and transportation, with trains, trucks and ships all running on it.

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About the writer

Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property insurance market, local and national politics. She has previously extensively covered U.S. and European politics. Giulia joined Newsweek in 2022 from CGTN Europe and had previously worked at the European Central Bank. She is a graduate in Broadcast Journalism from Nottingham Trent University and holds a Bachelor's degree in Politics and International Relations from Università degli Studi di Cagliari, Italy. She speaks English, Italian, and a little French and Spanish. You can get in touch with Giulia by emailing: g.carbonaro@newsweek.com.

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Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property ... Read more