When reports of a diesel supply shortage began making headlines last week, panic ensued as people wondered what would happen to the U.S. economy if supply continued to fall. However, one analyst said the numbers were taken out of context.
Oil demand plummeted during the COVID-19 and subsequently skyrocketed when the economy reopened, exhausting refineries as they tried to keep up with supply. Russia's invasion of Ukraine has elicited sanctions against Russian imported oil, and the Energy Information Administration (EIA) oil metrics show only 25 days of diesel remain in storage.
'Taken Out Of Context'
Head of Petroleum Analysis at GasBuddy Patrick De Haan said the numbers of days remaining were taken out of context and meant for analysts to interpret rather than the general public.
"It's a number that means something to an analyst, but it's probably not something any Americans outside of that would have context for," De Haan told Newsweek. "Subtle changes are the context here."
What Is The Context?
De Haan said the number of days left of diesel fluctuates by fractions of a percentage point each week.
"It tells us if refineries are able to keep up with supply or if demand exceeds supply," he said. "It's a number that moves very slowly. It has been 25.4 and gone up to 25.9 and now it's 25.8. That doesn't mean we are going to run of fuel in 25.8 days unless every single refinery shuts down overnight, which is never going to happen.
"Someone caught wind of a number they didn't have context for, and now everyone and their mother seem to be worried about running out of diesel in mid-November, which is not going to happen," De Haan added.
Who Risks Running Out Of Diesel Fuel?
De Haan said the number is a national number, and certain areas of the country have tighter supplies of diesel than others. Specifically, the northeast is struggling to meet diesel demand because of lost refinery capacity after a fire at a Philadelphia refinery in 2019. Another refinery in Canada shut down during the COVID-19 pandemic.
De Haan said diesel challenges are more likely to affect New England, the northeast and the mid-Atlantic more than other areas in the country. Some areas in the northeast could see stations running low or running out of diesel because of limited refinery capacity.
Since the northeast relies on imported oil, the sanctions against Russia because of the war in Ukraine are only exacerbating the issue.
"Europe is trying to find alternative sources and are competing for barrels with the northeast and mid-Atlantic," De Haan said. "Prices have shot up and supply is threatened, but that doesn't mean the entire nation will see diesel run dry."
'It's A Headache'
De Haan is concerned about the limited supply but only for the northeastern states. He compared the situation to a headache.
"In those areas, this is a headache. It's concerning, but it's not yet a migraine," De Haan said. "It's a headache. It may go away, or it could worsen."
There is good news on the horizon. A smaller refinery producing around 105,000 barrels of oil a day recently restarted in New Jersey after shutting down because of the pandemic and could allow for some breathing room in the northeast, according to De Haan. A large refinery also will soon open in Nigeria to cushion supplies of imported oil.
De Haan stressed that politics have nothing to do with the current state of diesel. The demand issues are a product of the economy surging after COVID-19 and Russia's invasion of Ukraine and the resulting sanctions against Russian oil.
"There is nothing Biden can do short of going to the refineries to work there himself," De Haan said.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Anna Skinner is a Newsweek senior reporter based in Indianapolis. Her focus is reporting on the climate, environment and weather ... Read more
