The U.S. supply of all distillate fuels, which includes diesel, is sitting at just about 25 days, its lowest level since 2008.
According to the U.S. Energy Information Administration's latest weekly numbers, the U.S. has just a bit more than 25 days of distillates, which includes diesel, left in stock. Essentially, not much has changed since the last time prices spiked and the specter of shortages loomed. The culprit remains largely the same: Weak refinery capacity and trouble moving the precious fuels around the country, particularly to the Northeast.
The weak refinery capacity is the product of a variety of circumstances, like a 2019 refinery fire in Pennsylvania, dwindling demand during the pandemic lockdowns and just plain old wear and tear on existing operations. The trouble with moving fuels, particularly diesel, around the country is the 1920 Jones Act, which strictly limits what ships can take what cargo between U.S. ports.
Around the world, other countries aren't doing that much better in securing the fuel of industry. France saw a worker strike at TotalEnergies refineries, and most of Europe faces an extreme diesel crunch when embargoes on Russian petroleum products take hold on December 5.
As a result of the overall market volatility, Mansfield Energy moved to "Alert Level 4" (the highest being five) and issued a supply alert for the East Coast: "U.S. diesel markets tend to be comfortable and liquid when inventories are around 35-40 days; 30 days of supply begins to get tight. At 25 days of supply, there’s critically low fuel available when a crisis hits."
A technician on-site at the Strategic Petroleum Reserve's Bryan Mound site near Freeport, Texas.Energy.gov
Furthermore, according Tracy Shuchart, a Global Energy & Materials Strategist at Hedge Fund Telemetry Geopolitics, the diesel fuel the U.S. is able to refine isn't going where it's needed.
