Below please see information regarding potential concerns over diesel fuel shortage in the U.S., collected through our partnership with Forward Air and their information sources.
What's happening
Some bulk and mobile fuel suppliers have been reporting diesel fuel shortages in select markets spanning the U.S. East Coast that will have the most impact on the Gulf and Atlantic Coast (KY, TN, WV, NC, SC, MD). Several news outlets have reported U.S. diesel inventories falling to 25 days of supply.
While fuel markets have tightened recently, they are not much tighter than they have been since the beginning of the year. According to data from the Energy Information Administration (EIA), diesel supply has fallen close to 25 days multiple times already this year. However, the average supply has been approximately 29 days for most of the year. While this most recent decline is worth watching closely, it's not something that just recently became an issue.
- Russia invading Ukraine earlier this year.
- Unprecedented price volatility leading to large shifts in the routes that oil and refined products now travel.
- An ongoing decline in refinery capacity which has placed further strain on inventory levels (a trend we’ve seen over the past few years).
- Caution among suppliers about holding on to large inventory because prices are expected to decline in the future.
- A supply gap resulting from an overlap of the temporary shortage in the Northeast with refineries ending their seasonal turnaround for maintenance.
- The short-term diesel shortage in the Northeast creating significant price advantages for refiners to ship barrels of fuel to the Northeast, skipping markets along the path of the Colonial Pipeline (Gulf & Atlantic Coast).
- While we cannot determine when exactly the market will shift, we expect inventory levels will rebound and lead to an improved supply of diesel.
- We will continue to monitor the situation closely and let you know of any significant developments.
The best thing to do with uncertainty is to prepare for it. Start planning now to ensure your company is best positioned to react appropriately during times of volatility.
