Supplies of diesel in the United States are some of the tightest in history, down to a 25-day supply. So, is there a chance of running out?
John Wenzel is an energy expert and Sr. Risk Manager with StoneX Financial, Inc. He says in the United States diesel production currently exceeds consumption. “The fact is the U.S. refines 25% more diesel than it needs, U.S. production is about 5 million barrels per day of refining, we only use about four. So, we have a lot of extra.”
However, that extra production is not getting where it’s needed due to distribution issues and some of that supply is being exported due to the Jones Act. Wenzel says, “You can’t take a ship from Houston to New York Harbor. 6:08 So there’s a million barrels per day of extra diesel that’s being refined we have to sell it overseas because there’s no ships available to just ship it up to New York.”
Wenzel says China has been exporting extra diesel as demand has been down in their country due to COVID restrictions. But with their restriction being relaxed that could increase demand and drive-up prices. “My worry is prices will be at these levels or higher in 2023.” Especially if the value of the dollar, which has imploded recently, continues to fall.
Wenzel says retailers are currently offering some great prices on diesel for 2023 with some discounts as much as 20 to 30-cents off of spot prices. So, for farmers he says it may be a good time to secure some diesel supplies.
