{"id":11748,"date":"2025-06-19T20:02:33","date_gmt":"2025-06-19T20:02:33","guid":{"rendered":"https:\/\/krogragg.com\/?p=11748"},"modified":"2025-06-19T20:02:33","modified_gmt":"2025-06-19T20:02:33","slug":"why-the-northeast-is-quietly-running-out-of-diesel","status":"publish","type":"post","link":"https:\/\/krogragg.com\/?p=11748","title":{"rendered":"Why the Northeast is quietly running out of diesel"},"content":{"rendered":"<p>    Why the Northeast is quietly running out of diesel<br \/>\n \t<BR><br \/>\n<BR><\/BR><br \/>\n    <!-- no image --><br \/>\n \t<BR><br \/>\n<BR><\/BR><\/p>\n<div>\n<p>The East Coast of the U.S. is reporting its lowest seasonal diesel inventory on record. And some trucking companies appear spooked.<\/p>\n<p>The East Coast typically stores around 62 million barrels of diesel during the month of May, according to Department of Energy data. But as of last Friday, that region of the U.S. is reporting under 52 million barrels.\u00a0<\/p>\n<p>The sharp increase of diesel prices has been a major stressor in America\u2019s $800 billion trucking industry since the beginning of 2022. According to DOE figures, the price per gallon of diesel has reached record highs \u2014 a whopping $5.62 per gallon. It\u2019s even higher on the East Coast at $5.90, up 63% from the beginning of this year.\u00a0<\/p>\n<p>When relief is coming isn\u2019t yet clear, and experts say higher prices are the only way to attract more diesel into the Northeast.<\/p>\n<p>\u201cI wish I had some good news for the Northeast, but it\u2019s bedlam,\u201d Tom Kloza, global head of energy analysis at <a href=\"https:\/\/www.opisnet.com\/\">OPIS<\/a>, told FreightWaves.\u00a0<\/p>\n<figure class=\"wp-block-image is-resized\"><img fetchpriority=\"high\" decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/-Bq0G7Ae7ryV-_0f-fZzwggZ9wLxBpS4auTivmrpjtQWMsp0TjEXXwo7rEOPq27vaxnPq6oAnsB7dt61YNQi6XRC0L2_B16eet-0Tm3CtHJTj7D786z7QHjMZcDjr21B_BJ01_DZKaAdhr_9jQ\" alt=\"\" width=\"750\" height=\"242\"><figcaption>2022 has seen record-setting diesel prices.\u00a0(SONAR)<\/figcaption><\/figure>\n<p>Everyday Americans don\u2019t fill up their cars with diesel, but the fuel powers <a href=\"https:\/\/www.freightwaves.com\/news\/why-every-american-should-care-that-diesel-prices-are-surging-across-the-country\">our nation\u2019s agriculture, industrial and transportation networks<\/a>. More expensive diesel means the price <a href=\"https:\/\/www.cnbc.com\/2022\/03\/30\/everyone-is-worried-about-gas-prices-but-diesel-is-driving-inflation-more-than-you-think.html\">of everything is liable to increase<\/a>. Trucks, trains, barges and the like consumed about 122 million gallons of diesel <a href=\"https:\/\/www.eia.gov\/energyexplained\/diesel-fuel\/use-of-diesel.php\">per day in 2020<\/a>.\u00a0<\/p>\n<p>Patrick DeHaan, a vice president of communications at fuel price site GasBuddy, reported that retail truck stops <a href=\"https:\/\/twitter.com\/GasBuddyGuy\/status\/1524705967404900355\">are hauling fuel from the Great Lakes to the Northeast<\/a>, calling it \u201cextraordinary.\u201d We\u2019ve also seen anecdotal reports from truck drivers posting company memos:<\/p>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\">\n<p lang=\"und\" dir=\"ltr\"> <a href=\"https:\/\/t.co\/yFYyjzYMWE\">pic.twitter.com\/yFYyjzYMWE<\/a><\/p>\n<p>\u2014 Craig Fuller <img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/s.w.org\/images\/core\/emoji\/15.0.3\/72x72\/1f6e9.png?ssl=1\" alt=\"\ud83d\udee9\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"><img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/s.w.org\/images\/core\/emoji\/15.0.3\/72x72\/1f69b.png?ssl=1\" alt=\"\ud83d\ude9b\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"><img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/s.w.org\/images\/core\/emoji\/15.0.3\/72x72\/1f1fa-1f1e6.png?ssl=1\" alt=\"\ud83c\uddfa\ud83c\udde6\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"> (@FreightAlley) <a href=\"https:\/\/twitter.com\/FreightAlley\/status\/1524418758097440768?ref_src=twsrc%5Etfw\">May 11, 2022<\/a>\n<\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"qme\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/hashtag\/FuelShortage?src=hash&amp;ref_src=twsrc%5Etfw\">#FuelShortage<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/DieselShortage?src=hash&amp;ref_src=twsrc%5Etfw\">#DieselShortage<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/SupplyChainCrisis?src=hash&amp;ref_src=twsrc%5Etfw\">#SupplyChainCrisis<\/a> <a href=\"https:\/\/t.co\/zVmXlshXN0\">pic.twitter.com\/zVmXlshXN0<\/a><\/p>\n<p>\u2014 Don Ricardo <img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/s.w.org\/images\/core\/emoji\/15.0.3\/72x72\/1f451.png?ssl=1\" alt=\"\ud83d\udc51\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"> <img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/s.w.org\/images\/core\/emoji\/15.0.3\/72x72\/1f1fa-1f1f8.png?ssl=1\" alt=\"\ud83c\uddfa\ud83c\uddf8\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"> <img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/s.w.org\/images\/core\/emoji\/15.0.3\/72x72\/1f1e9-1f1f4.png?ssl=1\" alt=\"\ud83c\udde9\ud83c\uddf4\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"> (@NjPier) <a href=\"https:\/\/twitter.com\/NjPier\/status\/1522252874725666816?ref_src=twsrc%5Etfw\">May 5, 2022<\/a>\n<\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div>\n<\/figure>\n<p>Pilot Flying J and Love\u2019s, two of America\u2019s largest truck stops, <a href=\"https:\/\/www.marketwatch.com\/story\/truck-stop-chains-monitoring-low-diesel-supplies-on-east-coast-update-271652360689\">told the Wall Street Journal yesterday<\/a> that they were not planning to restrict diesel purchases, but were monitoring low diesel inventory.<\/p>\n<p>Not unlike every other supply chain crunch we\u2019ve seen in the past few years, the cause of the Northeast\u2019s diesel shortage is multifaceted. A yearslong degradation of refineries is rubbing against the Gulf Coast preferring to ship its oil to Europe and Latin America.<\/p>\n<p>Here\u2019s a breakdown:<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-1-the-east-coast-has-lost-half-of-its-refineries\">1. The East Coast has lost half of its refineries.\u00a0<\/h2>\n<p>As Bloomberg\u2019s Javier Blas <a href=\"https:\/\/www.washingtonpost.com\/business\/energy\/us-east-coast-diesel-supply-is-running-on-fumes\/2022\/05\/04\/1ef4623e-cb83-11ec-b7ee-74f09d827ca6_story.html\">wrote on May 4<\/a> (emphasis ours):\u00a0<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>In the past 15 years, the number of refineries on the U.S. East Coast has halved to just seven. <strong>The closures have reduced the region\u2019s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009<\/strong>. Regional oil demand, however, is stronger.<\/p>\n<\/blockquote>\n<p>Rory Johnston, a managing director at Toronto-based research firm Price Street and writer of the newsletter <a href=\"https:\/\/www.commoditycontext.com\/\">Commodity Context<\/a>, told FreightWaves that refining is a \u201cthankless industry,\u201d with intense regulations that have limited the opening of new refineries. The Great Recession of 2008 led to several East Coast refineries shuttering, but there have been more recent shutdowns too. One major Philadelphia refinery shuttered <a href=\"https:\/\/www.inquirer.com\/business\/philadelphia-energy-solutions-refinery-hilco-sale-closes-20200626.html\">in 2019<\/a> after a giant fire (and it already had declared bankruptcy), and another refinery in Newfoundland shut down <a href=\"https:\/\/financialpost.com\/commodities\/energy\/first-north-american-refinery-shuts-with-fuel-demand-plunging\">in 2020<\/a>.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Billionaire John Catsimatidis owns a small oil refinery in the US East Coast and several hundred gas stations from Pennsylvania to New York: <\/p>\n<p>\u201cI wouldn\u2019t be surprised to see diesel being rationed on the East Coast this summer.\u201d <a href=\"https:\/\/twitter.com\/hashtag\/OOTT?src=hash&amp;ref_src=twsrc%5Etfw\">#OOTT<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/DieselCrisis?src=hash&amp;ref_src=twsrc%5Etfw\">#DieselCrisis<\/a> <a href=\"https:\/\/t.co\/9g1e5UIf20\">https:\/\/t.co\/9g1e5UIf20<\/a><\/p>\n<p>\u2014 Javier Blas (@JavierBlas) <a href=\"https:\/\/twitter.com\/JavierBlas\/status\/1524467066488692737?ref_src=twsrc%5Etfw\">May 11, 2022<\/a>\n<\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div>\n<\/figure>\n<h2 class=\"wp-block-heading\" id=\"h-2-it-s-a-financial-risk-to-bring-diesel-to-the-northeast\">2. It\u2019s a financial risk to bring diesel to the Northeast.<\/h2>\n<p>The Northeast has increasingly relied on diesel from the Gulf region. Much of that diesel travels to the Northeast through the famous and much-adored Colonial Pipeline. You may remember the 5,500-mile pipeline from last year, when a ransomware attack shuttered it <a href=\"https:\/\/premack.substack.com\/p\/this-is-what-happens-when-supply\/comments?s=w\">for nearly a week<\/a>!\u00a0\u00a0<\/p>\n<p>It takes 18 days for oil to travel on the Colonial Pipeline from its source in Houston to New York City (or, more specifically, Linden, New Jersey), Kloza said.<\/p>\n<p>That\u2019s a long enough time to prioritize Colonial pipelines financially risky for traders \u2014 or, as Kloza said, \u201cincredibly dangerous\u201d \u2014 thanks to a concept called \u201cbackwardation.\u201d<\/p>\n<p>Backwardation refers to the market condition in which the spot price of a commodity like diesel is <em>higher<\/em> than its futures price. It\u2019s only gotten stronger over time in the diesel market, Kloza said. So, a company could send off a shipment of diesel and find that it dropped by $1 per gallon in the time the diesel traveled from the Gulf Coast to New York \u2014 er, New Jersey. That could mean hundreds of thousands or more in lost profits, so traders often avoid such a fate.<\/p>\n<p>\u201cWe\u2019re not in an era where there are any U.S. refiners or big U.S. oil companies who would \u2018take one for the team\u2019 and bring cargo in where it\u2019s needed,\u201d Kloza said.\u00a0<\/p>\n<p>The desperation is showing in New England and the mid-Atlantic regions. New England diesel retail prices are up 75% from the beginning of 2022, <a href=\"https:\/\/www.eia.gov\/dnav\/pet\/pet_pri_gnd_a_epd2d_pte_dpgal_w.htm\">per DOE data<\/a>. In the mid-Atlantic, diesel is up 67%.\u00a0<\/p>\n<p>It\u2019s not worth the risk, even amid ultra-high prices. As FreightWaves\u2019 Kingston <a href=\"https:\/\/www.freightwaves.com\/news\/east-coast-diesel-market-a-growing-concern-as-inventories-plummet\">reported last week<\/a>, the spread between a gallon of diesel in the Gulf Coast and its New York harbor price is usually a few cents. Last week, that swung up to 66 cents.<\/p>\n<p>But that uptick still isn\u2019t justifying moving oil to the Northeast \u2014 particularly when traders can make so much more money selling diesel abroad.\u00a0<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-3-of-course-we-can-blame-covid-and-the-crisis-in-ukraine\">3. Of course, we can blame COVID and the crisis in Ukraine.\u00a0<\/h2>\n<p>The catalyst for this diesel shortage, of course, is the ongoing conflict in Ukraine \u2014 particularly <a href=\"https:\/\/www.vortexa.com\/insight\/european-oil-resupply-is-underway\">Europe\u2019s desperation for diesel<\/a> after weaning off Russian molecules.\u00a0<\/p>\n<p><a href=\"https:\/\/www.cnbc.com\/2022\/03\/30\/everyone-is-worried-about-gas-prices-but-diesel-is-driving-inflation-more-than-you-think.html\">As CNBC reported in March<\/a>, Europe is a net importer of diesel. Europe consumed some 6.8 million barrels of diesel each day in 2019; Russia exported some 600,000 barrels per day of that. Today, Europe <a href=\"https:\/\/www.vortexa.com\/insight\/european-oil-resupply-is-underway\">has only eliminated one-third of its Russian diesel<\/a>, so prices are expected to continue to climb amid that transition. Latin America, too, has been clammoring for U.S. diesel.<\/p>\n<p>The Gulf Coast has been happy to provide such diesel, amid \u201cinsane\u201d prices for diesel abroad, said Johnston. Waterborne exports of diesel from the U.S. Gulf Coast hit record highs last month, according to oil analytics firm Vortexa. (The records only date back to 2016.)<\/p>\n<p>Naturally, COVID is also to blame for the Northeast\u2019s run on diesel. Those refineries still retained on the East Coast scaled back during the pandemic due to staffing issues. It takes six months to a year to reignite refineries that were previously shuttered, Kloza said.<\/p>\n<h2 class=\"wp-block-heading\" id=\"h-the-everything-shortage-endures\">The \u2018everything shortage\u2019 endures<\/h2>\n<p>It\u2019s been a tale as old as, well, last year. An industry is quietly hampered by supply issues for years, or even decades, and COVID pulls back the curtains on its unsteady foundation. It\u2019s particularly jarring for commodities we never thought about before, like shipping containers or pallets, but that quietly underpinned our livelihood all along.\u00a0<\/p>\n<p>Recall the Great Lumber Shortage of 2020? Big Lumber had unusually low stockpiles of wood by the summer of 2020, thanks to <a href=\"https:\/\/www.wsj.com\/articles\/behind-lumbers-collapse-a-perfect-storm-of-housing-and-trade-11546437601\">a vicious 2019 in the lumber industry<\/a> shuttering sawmills and the spring of 2020 sparking staffing issues. (There was also a nasty beetle infestation.) <a href=\"https:\/\/www.vox.com\/22410713\/lumber-prices-shortage\">Those in lumber<\/a> expected the pandemic to slow the economy, not ignite online shopping, construction and housing mania. It meant lumber went from around $350 per thousand board feet pre-pandemic to a crushing $1,515 <a href=\"https:\/\/fortune.com\/2022\/01\/12\/lumber-prices-skyrocket-again-weather-sawmill-production-supply-chain\/\">by the spring of 2021<\/a>. The lumber price roller coaster <a href=\"https:\/\/www.newsweek.com\/why-are-lumber-prices-so-high-are-they-going-down-2022-1681105\">persists today<\/a>.\u00a0\u00a0<\/p>\n<p>In diesel, there\u2019s no beetle infestation, but there are plenty of other headaches. It all means higher fuel prices on the East Coast, particularly the Northeast, to lure molecules from the Gulf Coast. And, down the line, probably more expensive stuff for you.\u00a0<\/p>\n<p><em>Do you work in the trucking industry? Do you want to say that you hate or love MODES? Are you simply wanting to chitchat? Email the author at <a href=\"mailto:rpremack@www.freightwaves.com\">rpremack@www.freightwaves.com<\/a>, and don\u2019t forget to <a href=\"http:\/\/freightwaves.com\/modes\">subscribe to MODES<\/a>. <\/em><\/p>\n<p><em>Updated on May 13 with the latest comments from truck stops.<\/em><\/p>\n<p>The post <a href=\"https:\/\/www.freightwaves.com\/news\/why-the-northeast-is-quietly-running-out-of-diesel\">Why the Northeast is quietly running out of diesel<\/a> appeared first on <a href=\"https:\/\/www.freightwaves.com\/\">FreightWaves<\/a>.<\/p>\n<\/div>\n<p> \t<BR><br \/>\n <BR><\/BR><br \/>\n    Rachel Premack<br \/>\n \t<BR><br \/>\n<BR><\/BR><br \/>\n<a href=\"https:\/\/www.freightwaves.com\/news\/why-the-northeast-is-quietly-running-out-of-diesel\">Go to freight waves<\/a><br \/>\n \t<BR><br \/>\n <BR><\/BR><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why the Northeast is quietly running out of diesel The East Coast of the U.S. is reporting its lowest seasonal diesel inventory on record. And some trucking companies appear spooked. The East Coast typically stores around 62 million barrels of diesel during the month of May, according to Department of Energy data. But as of [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4904,3684,199,3638,3622],"tags":[3629],"class_list":["post-11748","post","type-post","status-publish","format-standard","hentry","category-editors-picks","category-fuel-news","category-news","category-top-stories","category-trucking","tag-freight-waves"],"_links":{"self":[{"href":"https:\/\/krogragg.com\/index.php?rest_route=\/wp\/v2\/posts\/11748"}],"collection":[{"href":"https:\/\/krogragg.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/krogragg.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/krogragg.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/krogragg.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11748"}],"version-history":[{"count":0,"href":"https:\/\/krogragg.com\/index.php?rest_route=\/wp\/v2\/posts\/11748\/revisions"}],"wp:attachment":[{"href":"https:\/\/krogragg.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11748"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/krogragg.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11748"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/krogragg.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}