The U.S. has about 25 days of diesel supply left amid soaring demand and the lowest supply since 2008, which some fear will drive inflation and make for soaring fuel prices as winter looms.
Last week, Bloomberg reported that the U.S. had 25 days of diesel supply. That level is “unacceptably low,” and “all options are on the table” to beef it up, National Economic Council Director Brian Deese said.
The fuel is already being rationed in the Northeast, where more people heat their homes with diesel than anywhere else in the country, and stockpiles now stand at a third of their usual level, Bloomberg reported.
Diesel is the main fuel source for trucks, trains and ships that transport food and goods around the world. If a truck’s diesel gets more expensive, everything on the truck will likely get more expensive, as well.
The supply crunch is partially due to a longer-than-expected period of what is called “backwardation,” where traders dump their holdings expecting lower prices in the near term, according to the Washington Post.
It also stems from recent years of increased reliance on European and Russian imports, the Post reported. Europe is conserving supplies for itself after Russia cut exports amid its ongoing Ukraine invasion, and the U.S. cut itself off from Russian oil early in that invasion.
Ships carrying diesel were recently rerouted from Europe to the U.S. in a sign of competition for the fuel, Reuters reported.
Several potential solutions to the shortage include releasing and expanding strategic reserves, limiting exports, and waiving a set of domestic shipping restrictions, according to the Washington Post.
At current demand levels, 1 million reserve barrels would be used up in less than six hours, the Post reported. Export limits could be a diplomatic challenge and hurt domestic producers. The shipping restrictions are popular with powerful lobbies in Washington, D.C.