Diesel shortages loom as energy crisis enters “perfect storm”

Winter is not even here yet and the diesel supply chain is already falling apart at an accelerating rate.

Tight refining capacity coupled with ever-depleting stockpiles bodes ominous for the coming weeks and months. If diesel supplies dwindle too low due to supply crunches, critical transportation networks such as ships, trains, and trucks will be severely impacted.

Diesel is also a power generation source for many utility companies and is also used in various capacities to heat homes and businesses in many parts of the world. (Related: In late October, Mansfield Energy issued a “code red” for diesel supplies in America’s Northeast and Southeast regions.)

“Within months, almost every region on the planet will face a danger of a diesel shortage just as supply crunches in nearly all the world’s markets have worsened inflation and hurt growth,” reported Bloomberg.

The crisis can clearly be seen at the pumps where diesel prices are now noticeably higher than gasoline prices, which are also sky-high. If things continue on their current trajectory, the diesel crisis could become a perfect storm and an inflation accelerant, the likes of which has never before been seen.

Diesel and fuel prices in general are pegged to crude prices as set on the global market. Because of supply bottlenecks and other problems, demand in some markets is far outpacing supply, which in turn affects everyone.

“Anything and everything that gets moved in our economy, diesel is there,” said Mark Finley, an energy fellow at Rice University‘s Baker Institute of Public Policy.

The U.S. currently has just a 25-day supply of diesel fuel, the lowest level since 2008. What this means, just to be clear, is that if all diesel production stopped immediately, the country would run out of it in 25 days.