A new report from the U.S. Energy Information Administration shows what happens when the nation’s diesel fuel inventory is low—rising prices.
The EIA reported the New York Harbor spot price for ultra-low sulfur diesel averaged $4.36 a gallon, the highest monthly average price since May of 2022 and the second-highest monthly average price on record.
The diesel crack spread—the difference between the price of crude oil and an equivalent volume of diesel—marked a historic high at $2.14/gal in October, even higher than during the summer. By comparison, this high was $1.61/gal, or over four times, more than the diesel crack spread had been in October 2021. The increases in distillate prices, both in the United States and globally, have been the result of multiple factors:
- Low inventories of distillate fuel oil (which is primarily consumed as diesel), both in the United States and globally
- Increasing demand for distillate, partially related to seasonal drivers such as agricultural demand and home heating demand in the Northeast
- Less production of distillate related to seasonal refinery maintenance, as well as lower refinery utilization in Europe following labor strikes
- Higher costs of transporting distillate ahead of the EU’s February ban on petroleum product imports from Russia
U.S. inventories of distillate fuel oil have been below the five-year (2017–2021) low since the start of 2022 (Figure 2). Since April, total U.S. distillate inventories have been below the five-year low and more than 20% below the five-year average. The Northeast—the combined New England (PADD 1A) and the mid-Atlantic (PADD 1B) regions—has been more than 40% below the five-year low since the end of July. The low inventories have primarily been the result of less global refining capacity since 2020, as well as high demand in early 2022 and global trade disruptions later in the year linked to Russia’s full-scale invasion of Ukraine. Consumption through the summer in 2022 has remained below pre-pandemic levels, but has increased relative to 2020.
Click here for EIA report