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August 29, 2022 5:35 PM, EDT

Diesel Surges 20.6¢ to $5.115 a Gallon

Truck filling up with diesel fuelThe average cost of a gallon of diesel is above $5 in six of the 10 regions in EIA's weekly survey. (Miguel Perfectti/Getty Images)

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Diesel’s nine-week run of declines abruptly ended as trucking’s main fuel rose 20.6 cents a gallon to put the national average cost back above $5, according to Energy Information Administration data released Aug. 29.

Diesel settled at $5.115 after dropping 90.1 cents from its all-time high of $5.810 on June 27. The cost of a gallon had dropped by at least a dime each week from June 27 to Aug. 8.



A gallon of diesel now costs $1.776 more than it did at this time in 2021.

Diesel increased in all 10 regions surveyed by EIA, ranging from a high of 28.2 cents in the Midwest to a low of 2.5 cents in the Central Atlantic.

The Lower Atlantic, Gulf Coast and Rocky Mountain region each has an average price of below $5 a gallon, while California remains the only region that exceeds $6.

U.S. On-Highway Diesel Fuel Prices

EIA regional fuel chart

EIA.gov

Meanwhile, gasoline dropped by 5.3 cents a gallon to $3.827 for the national average.

Oil Price Information Service Founder Tom Kloza said he is becoming increasingly concerned about the availability of diesel, especially in the Northeast U.S. where the Department of Energy says supplies for diesel and home heating oil are now 63% below the five-year average in New England and 58% below the same average in the Mid-Atlantic region from Maryland to New York.

“I am worried because we didn’t build any inventory this summer,” Kloza told Transport Topics. “And with exports taking one of three barrels, it’s still scary going into the winter and if the Northern Hemisphere has a cold winter, we just don’t have any cushion.”

Most of the diesel and other petroleum products are being shipped to Europe which saw its imports cut dramatically after Western nations imposed tough economic sanctions against Russia for its decision to invade Ukraine more than six months ago.

Europe is facing a diesel shortfall of around 1.5 million barrels a day and the deficit could expand as consumers replace natural gas with oil products, according to energy consultant FGE.

Energy Secretary Jennifer Granholm said she is planning a meeting of New England governors and other state leaders after the Labor Day holiday to discuss the situation. Until the face-to-face session is held, Granholm is urging governors to take whatever steps they can to shore up fuel supplies in coming weeks to prevent shortages.

Jennifer Granholm

Granholm

“I think that’s why the administration is trying to jawbone and get more refiners to move stuff from the Gulf Coast,” Kloza said. “Diesel is tight everywhere, every corner of the world, but it’s incredibly tight in the Mid-Atlantic and Northeast.”

On Aug. 18 Granholm sent a letter urging seven refiners, including Valero, ExxonMobil and Chevron, to continue building their supplies of fuel as the nation enters the peak of the hurricane season, which so far has been below average even as water temperatures in the Gulf of Mexico have been receptive to the formation of hurricanes.

“Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports,” Granholm said.

Kloza said besides the expansion of diesel inventories to Europe to help as it pushes back against Russian President Vladimir Putin’s invasion of Ukraine, he has another theory why diesel is in short supply along the Atlantic Coast.

“There is just not as much storage ... because a whole bunch of terminals are being converted to warehouses, bio-research corridors and things like that,” Kloza said. “The shortage of diesel is just an accident waiting to happen.”

Meanwhile, the BP-owned Whiting, Ind., refinery is back in operation after an electrical fire on Aug. 24. As a result of the fire the federal government declared a regional emergency in Illinois, Michigan, Indiana and Wisconsin. The refinery is in northwest Indiana, about 15 miles southeast of Chicago.

The Whiting refinery is the largest refinery in the Midwest and the sixth-largest in the country. It is capable of processing 440,000 barrels of crude per day. The four states get an estimated 25% of their fuel from Whiting.

BP said on the refinery’s fact sheet that that translates into 10 million gallons of gasoline a day, 4 million gallons of diesel and 2 million gallons of Jet A fuel. It produces enough gasoline to support the daily travel of an estimated 7 million cars.

At the time of the fire the refinery was running at 95.4% capacity.

According to the U.S. Department of Transportation and the Federal Motor Carrier Safety Administration, the Whiting fire impacted the supply of gasoline, diesel, and jet fuel across the four states, which prompted the emergency declaration.

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