It’s not gasoline that should worry us; it’s diesel

During COVID, trucking in America slowed, leaving many shelves empty. However, no matter the madness, there were enough truckers hitting the road for Americans to have food in their stomachs, gas in their cars, and clothes on their backs. However, in less than a month, it’s entirely possible that trucking will become too expensive for many truckers. Why? Because the real emergency isn’t rising fuel prices; it’s rising diesel prices.

This is a story that’s been on the periphery of my mind for several months now but, somehow, there was always something of more pressing importance (or, sometimes, purely amusing interest). However, when you learn that America theoretically has only 25 days of diesel left, you suddenly perk up and start taking an interest.

Image: Trucks by aleksandarlittlewolf.

ZeroHedge has been running with this story for most of 2022. Thus, even as the rest of us were deeply unhappy about rising oil prices and Biden’s unconscionable draining of the Strategic Petroleum Reserve to give Democrats a midterm election advantage, Tyler Durden was looking at diesel. Here’s a list of the articles he wrote on the subject:

Now, according to Durden, the diesel issue has risen to crisis proportions:

For all the drama surrounding Biden's latest Strategic Petroleum Reserve fiasco and his admin's ridiculous idea to "stimulate" US energy producers to pump more oil because, you see, Biden promises to buy oil at some unknown point in the future (he may or may not, but right now he is certainly draining a million barrels of emergency US energy lifeblood just to buy a few midterm votes, assuring energy producers have zero incentive to produce more), the real crisis is not oil or gas, but diesel.


... the crisis gripping the US diesel market is getting out of hand, as demand is surging while supplies remain at the lowest seasonal level for this time of year ever, according to government data released Wednesday.


According to the EIA, the US now has just 25 days of diesel supply, the lowest since 2008; and while inventories are record low, the four-week rolling average of distillates supplied - a proxy for demand - rose to its highest seasonal level since 2007.


In short, record low supply (courtesy of stifling regulations that have led to a historic shortage of refining capacity) meet record high demand. What comes next is, well, ugly (while weekly demand dipped slightly in the latest week, it’s still at highest point in two years amid higher trucking, farming and heating use).

Durden has a lot more to say on the subject and, if you like graphs, he’s got a lot of those too. The bottom line is that diesel prices have soared as supply has cratered. Durden explains in detail how we got to this situation, as well as the unpalatable choices the Biden administration faces as it tries to fix a crisis that could easily have been avoided. The choices will keep most of the trucks rolling, but they’ll hurt consumers, hurt people dealing with cold winters, or severely damage our allies’ economies.

Probably the most sensible approach is for the government to get out of the way and let market forces do their work, but that will mean soaring prices until the supply increases in response to those higher prices. If you thought inflation was bad before, just wait until the diesel crisis really takes hold—and yes, there’ll be empty shelves too as independent truckers can no longer afford to haul goods.

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