Diesel Supply Down to 25 Days But the Rockies Are in Good Shape

Missoula, MT (KGVO-AM News) - News reports that the national supply of diesel fuel is down to about 25 days has Americans deeply concerned about all the food, goods and services that are delivered by trucks fueled by diesel.

KGVO News spoke to Patrick DeHaan, analyst for Gas Buddy on Friday for details on this issue of national concern.

A Dire Forecast for Diesel this Winter

“It's been a challenging year for diesel and certainly much of that comes from Russia's war in Ukraine,” began DeHaan. “Russia produces a lot of heavy products, a lot of heavy oil that produce and yield more diesel. The other problem is simply demand post COVID that has certainly recovered significantly with many trucks and many goods. We can all remember how ports have been stuffed full with goods that Americans have been buying and those all need to move out of port via trucks.”

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DeHaan highlighted the squeeze between diesel fuel production through the process of supply and demand.

“Diesel demand has been high at the same time because of COVID,” he said. “We've lost a decent portion, about 5 percent of refining capacity has gone away because of a lack of demand back in 2020. Consequently, there's been less diesel being produced, along with more demand and that has sapped U.S. inventories to a point where diesel days of inventory on hand are now down to their lowest level going into the winter, I think ever. That’s 25 days and so, and things are very tight and that's pushing up diesel prices across the country.”

DeHaan said we in the Rocky Mountain Region will Have More Supply

DeHaan had more encouraging news for those of us living in the Rocky Mountain region.

“I think things are okay in the Rockies, that is refiners in this area are doing a fine job refining and a lot of that product is basically landlocked into the Rockies,” he said. “Now, areas of the country that are going to have a challenge are the Northeast because the Northeast doesn't have enough refining capacity. Ironically, areas of the Northeast, comparing them to the Rockies region, have 10 times the population and about the same amount of refining capacity, and that is the problem because the Northeast is reliant on imports of diesel and distillate product. And now the northeastern United States is competing with Europe for those barrels.”

Get Ready for Everything Hauled by Diesel Trucks to Cost Much More

DeHaan said this winter will be extremely difficult for diesel supplies and thus the limited supply will demand a much higher price worldwide.

“For diesel this could be a problem that sticks with us and maybe worsens over the course of the winter,” he said. “We're not even into the winter yet and snow has not really started flying generally across the country, so colder weather is a concern because diesel is also used as home heating oil in areas of the Northeast. In rural America home heating oil is what they use and so that is going to see a lot of pressure. If anyone's out there that has home heating oil or propane, those prices to heat your home are going to be much higher, maybe three times higher, with  natural gas higher as well, but it could be a long winter if there are some cold spells that could certainly challenge and push diesel prices up even more.”

Stocks of diesel and other distillate fuel oils were just 106 million barrels on Oct. 21, the lowest for the time of year since the U.S. Energy Information Administration started collecting weekly data in 1982.