The cost of diesel fuel hit a record premium over the cost of gasoline as refinery outages andlimit supply and drive up prices ahead of winter.
The national average for diesel fuel was $5.34 on Thursday, about $1.61 above the price of gasoline, according to Oil Price Information Service (OPIS).
Diesel fuel inventories are lower than they typically are this time of year as the U.S. increases its export of diesel to European countries that have stopped purchasing fuel from Russia.
"Traders have already started buying less Russian product and Europe is very short," said Marianne Kah, senior research scholar at Columbia University's Center on Global Energy Policy.
Limited refining capacity, other constraints
The U.S. was already coping with reduced refining capacity traceable back to 2019, when a major Philadelphia refinery caught fire and shut down.
The tight diesel fuel supplies that are driving higher costs are most apparent on the east coast, according to energy experts.
Today, the U.S. has an inventory of 26.6 days worth of diesel, according to the Energy Information Administration. However,, because that supply is constantly being added to.
"But 26.6 days is still a low number," said Opis chief oil analyst Denton Cinquegrana. "This time of year we want to be closer to 35 to 40 days on the EIA supply measurement."
That's because we're entering the colder winter months during which demand for diesel spikes as temperatures drop.
"A lot depends on the weather. If we have a really cold winter, then we're looking at some real issues," Cinquegrana said.
Higher shipping, food costs
If high diesel prices persist it will cost families more to heat their homes and also drive up shipping costs for consumers.
"That's probably where you will most feel it," Kah said. "Anything that uses diesel — trucks, rail — costs, will go up," she said.
High diesel fuel prices could cause food costs to spike if prices are still elevated when farmers, who use diesel to power their tractors, start tilling their land.
"It will be a problem for them, which will also increase food prices, so it works its way through the economy," Kah said.
Diesel prices could come down if the U.S. goes into a recession, Cinquegrana noted.
"This economy runs on diesel. If we have any sort of recession, you'll probably see demand for diesel drop and that will be an opportunity to replenish supplies a little bit," he said.
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