U.S. Diesel Stockpiles Are Shrinking Fast

The last time inventories were this low was 1982; fuel haulers in South Dakota get relief from HOS rules.

October 28, 2022

ALEXANDRIA, Va.—The U.S. has a 25-day supply of diesel, as the nation’s stockpiles of diesel and other distillate fuel oils are at 106 million barrels, the lowest for this time of year since 1982, reports the Economic Times. Distillate inventories are down 26 million barrels below the seasonal averages over the past 10 years, and the Biden Administration says it is working to replenish supplies.

Price increases and shortages in on U.S. diesel are likely over the next six months, unless the economy slows down and fuel demand eases. The national average price for a gallon of diesel is $5.31, according to AAA. A month ago, the average price was $4.88 a gallon, and a year ago, it was $3.62.

“The public are apoplectic when gas rises, but diesel has incredible impacts to inflation in the form of freight costs and surcharges,” Tom Kloza, global head of energy analysis for OPIS, told USA Today. “Between now and the end of November, if we don’t build inventories, the wolf will be at the door,” Kloza said. “And it will look like a big ugly wolf if it’s a cold winter.”

The Biden Administration is keeping a close watch on diesel inventories, reports FOX Business, and is working to boost supplies. National Economic Council Director Brian Deese acknowledged to Bloomberg that the level is "unacceptably low," and "all options are on the table" to address the situation.

The White House is closely monitoring the inventory levels, especially on the East Coast, and is in touch with U.S. energy companies about restocking the reserves and come up with solutions, reports FOX Business. The administration has been regularly speaking with East Coast state governors about options to combat the situation, including the Northeast Home Heating Oil Reserve, which holds roughly 1 million barrels of home heating oil.

Patrick De Haan, GasBuddy's head of petroleum analysis, told "Varney & Co" that viewers can expect to hear "a lot more" about refineries struggling to keep up with rising demand this winter.

In response, South Dakota governor Kristi Noem has issued an executive order to provide relief from the hours of service regulation for truck drivers delivering gasoline, diesel, jet fuel, propane, ethyl alcohol, natural gasoline, diesel exhaust fluid and anhydrous ammonia.

The relief from the state and federal requirements that “may unnecessarily delay the transportation of these products” is granted in the interest of public safety and to maintain a reliable supply, the order states. Unless extended it expires November 25.

According to the Argus Leader, South Dakota’s Public Utilities Commission informed customers of potential increased heating expenses this winter.

“The return of normal supply flows to storage terminals in South Dakota is unknown,” says the order.

The Federal Motor Carrier Safety Administration tracks state emergency declarations that affect motor carriers. To see the list, go to the agency’s Emergency Declarations, Waivers, Exemptions and Permits page.