American diesel reserves are running out and it's going to seriously affect you

A perfect storm is brewing in the diesel market and you should be prepared to spend even more this winter as the problem gets worse.

Last week the Energy Information Administration (EIA) reported that inventories of diesel, jet fuel, and heating oil had reached their lowest levels since 2008.

Why is there a diesel shortage this year? Some believe the Russian invasion of Ukraine in February of 2021 pushed American diesel reserves to all-time lows. 

Prior to the invasion, the United States imported roughly 700,000 barrels of petroleum and petroleum products from Russia a day, most of which were finished products used to bolster American fuel reserves. 

After the invasion, Russian oil imports stopped entirely and the reduction of 700,000 barrels a day represented a significant loss that couldn’t be filled by American production. 

American oil refineries couldn’t close the gap produced by the loss of Russian oil because they had undergone their own crisis throughout the Covid-19 pandemic. 

During the pandemic, the decreased demand for gas that resulted from everyone working from home reduced refinery production, a situation that only got worse as the pandemic persisted.

Since 2020, several east coast refineries have closed due to low production demand, and these many others have been forced to undergo routine maintenance. 

While the demand for gas decreased during the pandemic, the demand for diesel never stopped. Trucks still needed to deliver their goods and production was shifted from gas to diesel. 

Everything came to a head when demand for gas picked up after the end of the pandemic, just as Russia was sanctioned. Since then, American refineries haven’t been unable to fill the gap in production. 

According to the EIA, East Coast refineries operated at 100% capacity in June and July, and they have continued to produce at capacity since the summer. 

The situation is unlikely to return to normal before the end of next summer and the lack of certainty in diesel prices has probably already had some major impacts on your life. 

Everything from groceries and electronic devices to just about anything else you might buy in a store was delivered there by a diesel truck. 

“The economy and the supply chain is fueled by diesel," said Alix Miller, President and CEO of the Florida Trucking Association, "there has been a shortage for several months now, and we've seen the pain financially.”

Photo: Instagram @fltrucking

It's not just freight trucks that use diesel for fuel either. Everything from ships and barges to trains and some airplanes use diesel fuel to move goods around, the cost of which is passed on to the consumer in some form. 

Prices of everyday products are expected to rise drastically this winter as the cost to ship those goods is passed onto you, the end consumer.