- The U.S. diesel shortage is worsening as distillate inventories crash to multi-year lows.
- U.S. refiners permanently shut down some refinery capacity at the start of the pandemic when fuel demand plunged.
- A diesel shortage and high diesel prices don’t bode well for the global economy, which could tip into recession at some point next year.
“And do not harm the oil and wine” Rev. 6:6
Multi-year low inventories and constraints in supply are exacerbating a diesel shortage in the United States, especially on the East Coast.
Diesel demand continues to be strong after recovering faster from the pandemic slump than other fuels such as gasoline, refiners say.
But several factors have combined this year to deplete U.S. distillate inventories, which include diesel and heating oil. And ahead of the winter, the distillate fuel crunch is worsening.
U.S. refining capacity is now lower than it was before Covid, as operable refinery capacity shrank in 2021 for a second consecutive year to stand at 17.9 million barrels per calendar day as of January 1, 2022, according to EIA estimates. U.S. refiners permanently shut down some refinery capacity at the start of the pandemic when fuel demand plunged, while others closed facilities to convert them into biofuel refineries.
Some refineries were under maintenance this autumn, reducing the availability of products. In addition, the U.S. banned imports of all Russian energy products after the Russian invasion of Ukraine and hasn’t imported any petroleum products from Russia since April
Lower refinery capacity in the U.S. since the pandemic, seasonal maintenance at refineries globally, and a major strike in France have all combined in recent weeks to create a shortage of middle distillates, not only in the United States, but also worldwide.
The world is also scrambling for diesel supply also in view of the looming EU embargo on Russian fuel imports by sea, expected to kick in in early February.
A diesel shortage and high diesel prices don’t bode well for the global economy, which is slowing down and could tip into recession at some point next year.
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For more on Revelation 6:6 see “The 1% and Revelation” HERE