Alarms are sounding around the Southeast as diesel fuel supplies are reaching dangerously low levels. According to the Energy Information Administration (EIA), as of October 14 the United States had only 25 days of reserve diesel supply, a level of storage not seen this low since 2008.
This market volatility has caused Mansfield Energy, a fuel supply and logistic company, to move the Southeast region to a “code red”.
“Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility. Mansfield is also moving the Southeast to Code Red, requesting 72-hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels,” the company said.
Mansfield has warned that the crunch in supply is pushing diesel fuel prices well above the market average and warns that this disruption could lead to interruptions in fuel supply networks.
An additional concern is that heating oil inventories are also down roughly 20% below the five-year average for this time of year, causing the Northeast to begin rationing heating oil. This sounds disconcertingly similar to the situation in Europe where many feel that there won’t be sufficient resources to heat homes this winter.
The Biden administration claims they are closely monitoring the situation, weighing options to mitigate these critically low levels.
Regarding the levels of heating oil, Democrats are asking for a release from the Northeast Home Heating Oil Reserve (NEHHOR), a similar reservoir to the Strategic Petroleum Reserve but for heating oil. This would insure North-easterners can heat their homes this winter.
Biden is certainly going to have a hard time increasing the supply of these fuels through oil production, unless he were to completely reverse course on his fossil fuel policy stances he has maintained since his campaign.
This administration made it explicitly clear early on they would “end fossil fuels”. From day one of taking office, Biden actually kept that promise by enacting a slew of anti-fossil fuel policies that prevented our domestic oil production from reaching pre-pandemic levels as the economy reopened and boomed, full of stimulus.
Turning around and begging oil companies to increase production now is not going to work. Quid Pro Joe’s tactics sure didn’t work when he was begging the Saudi’s to do so. So it would seem that one of the only feasible solutions would be to continue draining the SPR and the NEHHOR. This would be totally unnecessary if we were energy independent like we were under the previous administration.
So what will the outcome of all this be? It very likely could play out that fuel inventories remain near empty and drive up prices significantly higher than they already are. Logistics costs would rise and goods would become more expensive, having a cascading inflationary effect when prices area already at record highs.
Who knew pandering to green energy activists would come at such a large price now. This certainly exemplifies why voters rank the economy at the top of their priorities going into the midterms.
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