Diesel demand is surging in the US while supplies remain at the lowest seasonal level since 1951, according to government data released Wednesday.
National Economic Council Director Brian Deese told Bloomberg TV last week that diesel inventories are “unacceptably low” and “all options are on the table” to build supplies and reduce retail prices.
The U.S. now has just 25 days left of diesel reserves, which marks the lowest point since 2008, according to the Energy Information Administration. At the same time demand is at the highest since 2007. This news also comes just as winter is about to hit and while much of the country is expected to experience record breaking cold this winter, according to the Farmers Almanac.
Bloomberg noted that “The diesel crunch comes just weeks ahead of the midterm elections and has the potential to drive up prices for consumers who already view inflation and the economy as a top voting issue. Retail prices have been steadily climbing for more than two weeks. At $5.324 a gallon, they’re 50% higher than this time last year, according to AAA data.”
The National Economic Council Director did mention that “all options are on the table” but didn’t go into detail on what those options are. The most likely option this late in the year would be to have energy companies switch over to producing more diesel and less gasoline, but this would drive up gasoline prices for the average person and will likely create a shortage.
Inflation is likely going to get worse over the coming months and interest rates are likely going to need to rise much higher than they currently are to slow this economy down enough.
We are far from being out of the woods and unless there is a significant and immediate change in direction, next winter is likely going to be much worse.
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