Diesel Fuel Could Hit $10 a Gallon

Semi-trucks pull into TA Travel Center to fill up with diesel in Jessup, Md., May 2, 2022. (Jim Watson/AFP via Getty Images)

Commentary 

The continued price shocks and meteoric rise of diesel fuel are causing extreme chaos.

Meanwhile, worsening inflation—made worse by the surging price of diesel fuel—continues across a wide array of consumables.

Adding more concern, summer is just around the corner, and the United States is entering peak driving time as millions of Americans take to the highways and drive to vacation spots.

According to The Post Millennial, the gas station chain “76” is preparing to accommodate $10-a-gallon fuel, going as far as reprogramming pumps to prepare for double-digit prices.

This comes as the national average soars to over $4.50-a-gallon, which is nearly twice the average during Donald Trump’s administration.

In a phone interview last week with Bloomberg, United Refining Co., CEO John Catsimatidis stated: “I wouldn’t be surprised to see diesel being rationed on the East Coast this summer, right now inventories are low and we may see a shortage in coming months.”

Catsimatidis added that he expects gasoline prices to hit all-time highs over the Memorial Day holidays.

Memorial Day travelers can expect higher prices across the board from hotels, food, clothing, electronics, and entertainment.

As prices continue to climb, truckers, importers, and retailers are passing on prices to consumers. The cost increase is hitting every industry, especially food. Farming is particularly vulnerable, as filling up a tractor costs upwards of $1,000 a day, which is twice what it was a year ago.

As long as diesel remains sky-high, pain at the pump and pain at the cash register is all but inevitable.

The cost increases are almost impossible to avoid as roughly three out of four registered commercial vehicles in the United States run on diesel.

Nearly every item Americans use is transported by truck. According to Dani Romero from Yahoo Finance, “Trucks carry approximately 70 percent of domestic freight in the U.S., moving manufacturing, wholesale and retail goods to their next destination.”

Fuel Shortages?

Just when you thought it couldn’t get any worse add in the risks of a diesel fuel shortage and there is potential for a real disaster.

As reported via the online farm journal Ag Web, Peter Meyer, from S&P Global Commodity Insights said: “Certain areas of the country have seen shortages already and we expect that to continue. Supplies at New York Harbor–a hub for diesel distribution–are at a 30-year low.

“As such, the East Coast of the U.S. has been hit especially hard, resulting in diesel prices above $6.00 per gallon in that area, well over the equivalent of $250 per barrel. Exports of U.S. gasoline, diesel, and jet fuel to Latin America is also very high, adding to the tightness.”

Reuters energy analyst John Kemp reported on May 19: “Global distillate fuel oil shortages signal the business cycle is peaking and a period of slower growth or even a recession is imminent to bring consumption back in line with production.

“Middle distillates including diesel and gas oil are the primary fuel used in manufacturing, shipping, trucking, freight railroads, mining and farming so price and availability corresponds closely with the business cycle.”

A semi-truck fills up with diesel fuel outside of Bakersfield, Calif., on April 18, 2022. (John Fredricks/The Epoch Times)

Experts and economy watchers expect a painful recession any day now. How can everyday consumers avoid economic pain? Consumers can use apps like Gas Buddy to find the cheapest option available.

According to well-known oil price analyst Tom Kloza, “most gasoline retailers are seeing fuel sales trail 2019 by 10 percent or more. Notable exceptions are the Big Box retailers. OPIS reports that BJ’s today reported quarterly gasoline volumes in 1Q23 up 23 percent from same period last year. Fuel is magical for Costco as well.”

Wholesale buying clubs like BJ’s, Sam’s, and Costco are an excellent option for customers searching for lower-priced regular gas, but it is doubtful that trucking fleets have access to this option.

Regardless, distillate fuel inventories are near a 23 percent low, compared to the five-year average for this time of year. The situation is so bad in the United States there are diesel fuel thefts happening across the country.

This past Saturday the Sacramento Police Department offered a gun buyback plan in exchange for gas cards—they ran out of gas cards in 45 mins.

As Fox News reported May 23, “prices are even steeper in the Northeast region because it has fewer refineries than the rest of the country: In New York, for instance, prices are as high as $6.51 per gallon—a stunning 102 percent increase from one year ago.”

While the White House announced plans to release strategic reserves, any strategic reserves released will fail to cover the supply shortfall. Refining capacity across the United States and many parts of the globe have been slashed over the past few years. Refiners are simply unable to keep up with demand.