High diesel prices present trouble for greater supply chain

Business

(NewsNation) — Despite President Biden’s decision to release 15 million barrels from the U.S. strategic reserve last week — dropping the average gallon of gas eight cents in the process — the price of diesel gas remains unchanged, reports say.

According to the U.S. Energy Information Administration (EIA), the average price of diesel is at $5.34 per gallon — up $1.67 per gallon from last year.

The report goes on to reveal the demand for diesel is the highest its been since 2007 while supply is at its lowest level since 2008.

Overall, the nation is down to a less than 25-day supply.

“Every time we come get a fill, it’s either going up and up and then it goes down a little bit it’s a mind game, it’s only going down a little from where we first started,” Glen Lott, a trucker, said speaking on NewsNation’s “Rush Hour” on Monday.

Sitting at more than $200 a barrel — which is more than double the price of regular gasoline — the price of diesel not only puts a cloud over all of Biden’s efforts to reign in record-high gas prices for frustrated voters ahead of midterms, but further puts a strain on other markets, as diesel-ran semi-trucks keep the supply chain moving.

America’s farmers have been especially feeling the hit.

“All of our tractors that we use in production and harvest run on diesel fuel, a lot of our farm vehicles run on diesel fuel,” James Bryant, a Virginia farmer, said to “Rush Hour” on Monday.  

That diesel fuel is decimating budgets: Market expert Phil Verleger predicts the supply and demand imbalance could push the national average over $7.00 a gallon.

“We won’t have shortages, we’ll just have very high prices,” Verleger said. “A lot of truckers will not drive in Southern California. There won’t be enough trucks to unload all of the ships.”

Driving the shortage is America’s continued export of diesel, which coincides with far higher demand domestically for agriculture and transportation. Federal environmental regulations limits on U.S. production do not help either.

“The regulations stipulate that we have almost no sulfur in diesel fuel and there’s not enough capacity to make diesel fuel that sets these specifications,” Verleger said.

The dismal outlook is driving a big change.

“I see people selling their trucks already because they cannot afford to keep their trucks running and the thing is, the expenses are going up, including gas but salaries are not,” Pablo Castellon, a trucker, said to “Rush Hour” on Monday.

While diesel prices are expected to remain high through the end of the year at least, some relief may be on the horizon with maintenance work wrapping at a key diesel refinery in Pennsylvania, which is expected to be back online soon.

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