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Diesel fuel prices have risen ~50% this year to $5.35/gallon, the highest price ever for gasoline and crude oil, in another example of how disruptions in global energy markets can cause price volatility and possible decrease.
The spread between diesel and gasoline has widened to $1.61/gallon from a difference of just $0.23 a year ago, according to The Wall Street Journal; The US has just 25 days of diesel fuel in place, the lowest since 2008, according to the Energy Information Administration.
Higher prices are hitting businesses from miners and producers to distributors and retailers, who are paying inventory to transport goods; Meanwhile, refiners are reaping profits, as are shares of Valero Energy (NYSE: VLOMarathon Petroleum (NYSE: MPC) and Exxon Mobil (NYSE: XOM) rose more than 80% YTD.
US diesel sales have been declining since the summer of 2020, and are now down ~10% below the previous five year level, but this number is 40% in the Northeast.
The shortage of diesel itself is mainly driven by exports, especially to Europe, which often fetch higher prices, and legal restrictions on the types of ships that can move fuel between places in the US increase the costs that encourage exports.
East Coast inventories of diesel and heating oil are currently at 25M barrels, Macquarie analyst Vikas Dwivedi said. WSJ that the average winter eliminates them by ~20M barrels, but the worst winter “can easily drop 23, 24, 25 million, and that’s all you have.”
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Such alarming figures are what have led the Biden administration to push for US oil sales.
