According to the Energy Information Administration (EIA), the United States now has less than 25 days of diesel stocks, the lowest level since 2008—and down from 34.2 days during the previous four weeks. The fuel is already being rationed in the Northeast, with suppliers in several states forced to conserve heating oil as the winter months approach. New England’s stockpiles are at less than a third of their usual levels for this time of year and the lowest levels since April 1992, which is concerning since those states rely on the fuel for heating more than any other part of the country. Diesel is also used for transporting goods as well as powering construction, farming and military vehicles and equipment. Unlike gasoline and jet fuel, demand for diesel recovered at a much faster pace from the coronavirus pandemic. In 2021, the U.S. transportation sector consumed 46.82 billion gallons, or 1.11 billion barrels of diesel fuel — at an average of about 128 million gallons a day.

Total national diesel stockpiles are at 106.187 million barrels, down about 34 percent since Biden took office. According to EIA, demand eased in the past week, coming in at 4.072 million barrels, although consumption is still up nearly 20 percent compared to the previous four weeks.

The national average price of diesel as of October 24 was at $5.34 a gallon — $1.63 more than last year. Traders are paying more for prompt deliveries than longer-term deliveries as they expect prices to drop in the future — a downward market structure known as “backwardation.” The market usually moves into “contango” — the opposite of backwardation, where demand is lower and suppliers build up inventory with the expectation of higher future prices in the summer. However, strong domestic and international demand, shrinking domestic refining capacity and sanctions on Russian petroleum imports have kept the diesel market tight throughout the year.

The Northeast Home Heating Oil Reserve holds one million barrels of diesel in case of a disruption in supplies. However, diesel demand is so high, that if a million barrels of diesel were delivered from the Northeast reserve, those barrels would be depleted in less than six hours.

Biden’s Strategies

The Biden administration recently announced it would be tapping into the country’s emergency oil reserves again to counter rising gasoline and diesel prices, despite concerns over the long-term efficacy. Due to the Biden Administration’s depleting the reserve since November 2021, the Strategic Petroleum Reserve is at levels not seen since June 1984. In November, Biden tapped the reserve for 50 million barrels of oil ahead of Thanksgiving. In March, Biden tapped the reserve again for 30 million barrels at the onset of Russia’s war with Ukraine. Shortly thereafter, Biden followed up that release with the 180 million barrel drawn down. Biden is now tapping the last 15 million barrels of the 180 million barrels just before Election Day to keep prices from rising as the electorate goes to the polls.

By the end of the year, Biden will have depleted 260 million barrels of oil from the reserve, which has an authorized capacity of 714 million barrels. The reserve now holds about 400 million barrels of oil, marking its lowest level since June 1984. The emergency petroleum reserve, established in the 1970s to prepare the United States for a sudden and severe disruption in supply is being used by the Biden administration to keep gasoline and diesel prices from rising.

White House officials are also considering petroleum export restrictions. Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity through closures or conversion to biofuels, put upward pressure on consumer fuel prices and alienate U.S. allies during a time of war. In California, refiners producing biofuels currently receive a premium of $3.70 per gallon. Setting minimum inventory levels could also affect the number of exports being sent out to foreign countries. And even if domestic supply sees some relief, prices could still be pushed up around the rest of the world.

Meanwhile, two vessels carrying about 90,000 tons of diesel and jet fuel are scheduled to arrive in New York after being diverted from their original European destinations. In addition, Delta Air Lines’ Trainer refinery in Pennsylvania is poised to return from seasonal maintenance, which will help increase diesel output. Since 2020, the United States lost about 1 million barrels per day in operable refining capacity. Over the past decade, the number of refineries dropped to 129; in the Northeast, only seven refineries remain. Refinery utilization rates have been averaging above 90 percent. Despite knowing how tight the refinery market is, Biden is doing nothing to encourage more refineries to be built or expanding existing ones.


U.S. diesel inventories are unacceptably low as demand is surging ahead of winter — with only 25 days of supply left. The low level of inventory and the escalating prices, over $5 a gallon, has gotten the attention of the White House going into the mid-term elections. Diesel is the second largest cost to the trucking industry, after labor, and the high diesel prices will continue to affect inflation through the production and delivery of food and merchandise. As the SPR is being decimated of the quality of oil that U.S. refiners need, Biden is running out of ways to bring prices down. Further, the Northeast is in dire shape as winter approaches with distillate stocks down by about a third, inadequate pipeline capacity and fracking bans. The Northeast is taking on many of the characteristics of Europe when it comes to energy.

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