Currently, there are diesel supply shortages in many locations. This is affecting the United Kingdom, the Midwest, and the East Coast of the United States. The diesel supply shortages can cause some serious problems for drivers. Some have even been forced to take their vehicles off the road altogether.
Earlier this year fuel supplies on the East Coast of the United States became extremely tight. These shortages were not caused by a natural disaster, but were attributed to the increase in exports and the steep market backwardation. This led to a shortage of fuel and a surge in prices.
The Energy Information Administration reported last week that diesel supplies on the East Coast were at the lowest seasonal level in more than a decade. As of October 21, distillate fuel inventories are down more than 20% from the five-year average for this time of year. This could mean a shortage of fuel for consumers, especially in the Northeast and Central Atlantic states.
The diesel shortage is caused in part by reduced capacity at refineries. Several refineries shut down since 2020, limiting the availability of diesel and other fuels. The US also experienced a major refinery fire in Philadelphia, which contributed to the shortage.
The US has also been hit by the Russian war on Ukraine, which has halted distillate imports from Russia. This is causing the world to scramble to meet diesel demand. Europe has cut one-third of its Russian supply. The EU is expected to implement an embargo on Russian fuel imports by sea in February.
Several major fuel suppliers have issued an alert for diesel on the East Coast. These include Mansfield Energy, a major fuel logistics company. It’s urging businesses to prepare for a diesel shortage. The company has moved to a Code Red status, requiring 72-hour notice for deliveries. The company is currently alerting customers in Georgia, North Carolina, and South Carolina.
Prices are expected to continue climbing. Retail diesel prices on the East Coast are up about 67% from the start of 2022. These increases are likely to affect the $800 billion trucking industry. This is because diesel fuel is used to fuel trucks and heating systems. It’s also used to power machinery. A shortage of diesel could affect consumers’ heating bills, and could lead to higher prices on consumer goods.
The White House is reportedly working to increase fuel reserves. It also has vowed to monitor the diesel supply. The government has also diverted two cargo ships in October, allowing the U.S. to receive up to one million barrels of diesel.
Several areas of the country are currently experiencing diesel supply shortages. Some truck stops are closing because they don’t have enough fuel on hand to satisfy demand. These shortages appear to be temporary, but they can cause consumers to pay higher prices at the pump. In some instances, drivers can find themselves in long lines at gas stations.
As winter approaches, demand for diesel is expected to increase. This will raise prices at the pump and may also lead to higher shipping costs for consumers. In addition, higher prices may also drive up heating costs.
Diesel fuel is used to power vehicles such as trains and ships. Unlike gasoline, which is typically consumed by individuals, diesel is used by companies to power their heavy transport vehicles. As a result, diesel supply shortages are a big concern as the cold weather months approach.
The Midwest is one of the most affected regions. In July, diesel prices skyrocketed in the region. This was due to a shortage at one of the nation’s largest refineries. The company announced that it was boosting fuel inventory levels.
Another reason for the diesel supply shortage is the recent shutdown of the Whiting refinery. This shutdown caused a major disruption in fuel supply in Tulsa, Oklahoma. The company closed the facility twice a day.
The diesel supply shortage has also affected truckers in the Southwest, and parts of Ohio. However, it’s the northeast that is seeing the greatest shortfall. The region primarily receives fuel supplies from the Philadelphia and New York metro areas.
The National Economic Council has warned that inventory levels are “unacceptably low” and has called on the industry to curb exports of refined products. The EIA has reported diesel fuel inventories on the East Coast at 45% below the five-year average. The lowest diesel inventories have been found in June, July and August.
The shortage has also prompted a “Code Red” alert by a fuel supply company for six states: Virginia, Maryland, North and South Carolina, Georgia, Alabama and Tennessee. The company said that the situation is similar to the conditions in the Southeast in May.
Across the UK, the petrol supply chain is breaking down. While most stations have fuel available, some are still unable to fill up. This has forced drivers to line up for hours and can stretch hundreds of meters.
Earlier in the week, the Petrol Retailers Association (PRA) reported that one in three of the country’s filling stations had been forced to close. The association urged drivers not to panic. It said the most important thing was to stay on top of your fuel, and to ensure your tank was at least a quarter full.
The UK government is also trying to get fuel to areas hardest hit by the shortage. The government has drafted in 150 military tanker drivers to help deliver fuel. It also says it will deploy soldiers to end fuel shortages, and plans to double the number of truck drivers it tests. The government plans to ease visa rules to allow 5,000 foreign truck drivers into the country.
Demand for diesel has risen in the UK since the Covid-19 restrictions were lifted. The price of diesel has risen 18% over the past month. Several companies, including BP and Shell, have cut their supplies. Several BP stations have been forced to close.
The UK government has announced a number of emergency measures to address the crisis, including a freeze on competition law. It has also pledged to cut imports of Russian fuel by the end of the year.
Meanwhile, the war in Ukraine has aggravated the fuel supply crisis. The conflict has pushed up prices for diesel and petrol. It has also impacted global supply. The war has cut fuel oil imports to Europe.
Despite the government’s attempts to solve the crisis, there are still many areas of the UK where petrol and diesel supply shortages are a reality. The cost of living has increased and many people are choosing between food and heating.
The UK government has announced several measures to address the shortages, including a temporary work visa for 5,000 foreign truck drivers. It has also pledged to put 150 military tanker drivers on standby to help deliver fuel.
Costs of unsupplied diesel
Having a stable supply of diesel fuel is beneficial for the economy because it is used in a variety of industries. This includes manufacturing and agriculture. The fuel is also used for commercial vehicles and mining and quarrying. However, diesel supplies are becoming increasingly scarce. With the lack of supply, prices are also increasing. Therefore, policymakers need reliable information on the reliability of diesel supply.
In order to determine the economic costs of unsupplied diesel, four methods are known: the input-output (I-O) approach, the customer survey approach, the production factor approach, and the willingness-to-pay approach. These approaches all require calculating the average cost of unsupplied diesel in Korean won per liter.
The optimal allocation policy involves reducing the final demand for diesel in ascending order of the value-added multipliers. In other words, the diesel-providing industry will first cut supply to sectors with a lower value-added multiplier. This will result in the largest increase in the total value-added of the economy.
Diesel prices have been increasing steadily for several years. The average price for diesel was KRW 967 (USD 0.88) in 2009. During the last year, the average price increased $1.59. The average price is expected to increase in the next six months. If diesel supplies become more scarce, prices will increase even further. Therefore, the tighter financial conditions will cause consumers to reduce their fuel consumption. However, diesel supply shortages will cause production disruptions. Therefore, rebalancing diesel supply will require further tightening of financial conditions.
In order to calculate the average cost of unsupplied diesel in Korea, the GAUSS program was used. The program calculates the economic cost of unsupplied diesel in Korean won and uses EXCEL to calculate the input-output framework. The result is that the economic cost of unsupplied diesel is KRW 716 per liter. This cost is 74% of the sales price. The cost is also independent of the shortage percentage. Therefore, the marginal cost is also the same.
The GAUSS program was applied to estimate the economic cost of unsupplied diesel supply shortages in Korea in 2009. Results indicate that the economic cost of unsupplied diesel shortages was USD 953 billion.