Much has been made about gas prices as of late. With average American consumers generally driving gas-powered cars rather than diesel-powered vehicles, that makes sense: it is the issue on the minds of your average American and so what the politicians are going to talk about.
But, though the average price of a gallon of gas is up a painful $0.44 from this time a year ago (according to AAA data as of the time of writing this article), that might not be the biggest fuel problem the American economy currently faces.
Rather, the diesel inventory shortage could be the next big issue to play havoc on the already faltering Biden economy.
News on that comes from ZeroHedge, which reported that:
… 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).
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As noted in the last bit of the quoted portion ZeroHedge article, diesel is important because it’s used across the economy. Diesel powers power plants that heat our homes. It powers the trucks that carry goods, most importantly groceries and medicine, but also the delivered goods that are the lifeblood of the consumer economy right now, across the nation. It powers the trains that carry heavier loads of goods and everything from cattle to coal.
In short, consumers might generally use gas for their personal vehicles, but the economy uses diesel. And America has less than a month’s supply of it left.
Bloomberg’s Javier Blas wrote about the danger of the small and shrinking diesel inventory as well, arguing that:
“low levels are alarming because diesel is the workhorse of the global economy. It powers trucks and vans, excavators, freight trains and ships. A shortage would mean higher costs for everything from trucking to farming to construction.”
Without diesel, the economy would grind to a halt. It’s needed for everything from farming to freight. So, though America is blessed with natural resources and likely won’t run out of diesel entirely, prices could tick up substantially as inventories dip lower, making everything yet more expensive.
And prices are indeed already climbing higher, up over 50% from a year ago as winter, and the need to heat homes with diesel in many areas, is just around the corner.
And the potential pain felt by that is before even taking into account other price increases in industries impacted by diesel fuel as well, such as farming, where fertilizer prices were up dramatically this year.
By: Gen Z Conservative