US diesel inventories are rapidly shrinking

ALEXANDRIA, Va.—The United States has a 25-day supply of diesel as national inventories of diesel and other distillate fuels stand at 106 million barrels, the lowest for this time of year since 1982, reports the Economic Times. Distillate inventories are down 26 million barrels below seasonal averages over the past 10 years, and the Biden administration says it is working to rebuild supplies.

US diesel price hikes and shortages are likely over the next six months unless the economy slows and fuel demand declines. The national average price for a gallon of diesel is $5.31, according to AAA. A month ago the average price was $4.88 per gallon and a year ago it was $3.62.

“The public is apoplectic when gas goes up, but diesel has incredible impacts on inflation in the form of transportation costs and surcharges,” Tom Kloza, global head of energy analysis for OPIS, told USA. Today. “By the end of November, if we don’t build inventories, the wolf will be out the door,” Kloza said. “And he’ll look like a big ugly wolf if it’s a cold winter.”

The Biden administration is closely monitoring diesel stockpiles, FOX Business reports, and working to increase supplies. National Economic Council Director Brian Deese admitted to Bloomberg that the level was “unacceptably low” and that “all options are on the table” to remedy the situation.

The White House is closely monitoring inventory levels, particularly on the East Coast, and is in contact with U.S. energy companies to replenish supplies and offer solutions, FOX Business reports. The administration has regularly discussed with governors of East Coast states options to combat the situation, including the Northeast Heating Oil Reserve, which contains about 1 million barrels of heating oil.

Patrick De Haan, head of oil analysis at GasBuddy, told ‘Varney & Co’ that viewers can expect to hear “a lot more” about refineries struggling to meet rising demand this winter.

In response, South Dakota Governor Kristi Noem issued an executive order to ease hours of service regulations for truck drivers delivering gasoline, diesel, jet fuel, propane, ethyl alcohol, natural gasoline, diesel exhaust fluid and anhydrous ammonia.

Exemption from state and federal requirements that “may unnecessarily delay the transportation of these products” is granted in the interest of public safety and to maintain a reliable supply, the order states. Unless extended, it expires on November 25.

According to Chief Argus, the South Dakota Public Utilities Commission has notified customers of potential increases in heating expenses this winter.

“The return of normal supply flows to storage terminals in South Dakota is unknown,” the order reads.

The Federal Motor Carrier Safety Administration tracks declarations of states of emergency that affect motor carriers. To view the list, go to the agency’s Emergency Declarations, Waivers, Exemptions and Permits page.

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