Fact Finders: What’s driving up diesel fuel prices?
Is it just the Russian war with Ukraine?
SPRINGFIELD, Mo. (KY3) - President Biden is considering tapping the Northeast Home Heating Oil Reserve. It could help with the soaring prices of diesel fuel. Triple-A puts the national average for diesel right now at 5.57 a gallon.
One of our viewers on this Fact Finders wants to know why diesel prices have increased by more than $2 a gallon. Is it just the Russian war with Ukraine?
After talking to analysts, we hear the war is a factor. Analyst Janiv Shah with Rystad Energy told us Russia’s war in Ukraine has a real impact, “Ongoing sanctions and a potential E.U. embargo on Russia have extensively impacted the global crude and products markets.” But, he also mentioned the summer driving season as a factor. He told us that as driving season approaches and demand increases, that would impact the price at the pump.
Gas Buddy’s analyst Patrick De Haan added another factor, the U.S. and European refining capacity dropped during the pandemic, and it hasn’t recovered. “What’s happening is now that Europe has less refining capacity, and more of their products were diesel. There’s kind of a net shortage in the diesel market. Not only that, but the U.S. has lost the capacity for diesel. And I might add that there’s about twice as much gasoline produced for every barrel of diesel. Not only that, but diesel inventories, then over the last three months have been plummeting,” explained De Haan.
De Haan added that the United States had lost the capacity to refine more than a million barrels a day in the last three years. He says that’s 5% of U.S. capacity. He says a refinery fire in 2019 knocked out one facility. A hurricane devastated another U.S. plant.
Circling back to the viewer question, is it just the Russian war with Ukraine? We’re hearing that’s undoubtedly a major factor. But we’re sliding this to NO tonight. The Russian War, the rebounding demand for diesel from pandemic lows, increased demand during the summer, and the loss of refining capacity are all playing a role in the rising diesel prices.
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