Is a diesel fuel shortage on the horizon?

William Thornton

Global pandemic. Universal lockdowns. Toilet paper shortages. Running out of meat. Coins growing scarcer. Soaring gas prices.

Americans have gotten used to a lot of scary headlines over the last two-plus years. The latest is a story circulating on social media that the country has about 25 days supply of diesel fuel left.

The average price of a gallon of diesel fuel in Alabama currently is $4.99, according to AAA Alabama. That’s more than 30 cents higher than a month ago, and 65 cents less than the all-time high set back in mid-June.

The doom-laden deadline of 25 days, however, stems from a report last month from the U.S. Energy Information Administration, which estimated the country had 25.9 days’ worth of diesel fuel on hand. However, that number doesn’t mean what you may think it does.

According to Verify, that metric measures the supply in the U.S. if refineries stopped producing oil, and if the U.S. stopped importing it from other countries. Neither of those scenarios seem likely.

Instead, it’s a number used to show how the overall supply is impacted by the market.

What we’re seeing now, as reflected in a higher-than-normal diesel price, is a low supply and high demand.

Market logistics firm Mansfield Energy put it this way: “It is worth clarifying that ‘25 Days of Supply’ does not mean that the US will run out of diesel,” the company said. Instead, the “most likely scenario is higher prices, with some sporadic local outages that get filled in by surrounding markets.”

Just three years ago, the U.S. dipped to 26.5 days of supply. Normally this time of year, the supply would be around 35 to 40 days, according to CBS News.

Insider explains that the roots of this year’s shortage stretch back to the pandemic, when refineries stopped refining fuel because they anticipated diminished demand. But diesel was still needed, as Americans still required goods shipped.

Two years later, demand has continued to soar, but at the same time, the U.S. is exporting more oil. In addition, there is more demand for oil globally following the Russian invasion of Ukraine.

In the meantime, analysts say prices will continue to be high for diesel until market forces cause demand to slow. That, in turn, will allow refineries to build up more supply.

All of that is probably going to take more than 25 days though.

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