A diesel supply alert has been issued on the US east coast, with Mansfield Energy, a leader in petroleum marketing and fuel supply, describing the current market as “rapidly devolving.”
“Markets are now seeing extremely high prices in the Northeast along with supply outages along the Southeast,” the warning issued by the fuel logistics company noted.
The alert in the memo was extended to states including North Carolina, South Carolina, Virginia, Tennessee, Georgia, Alabama, and Maryland.
As it issued its advisory to businesses that rely on diesel, Mansfield Energy underscored that while typically the East Coast markets have 50 million barrels in storage, there were less than 25 million barrels available currently.
The looming fuel shortages were due to “poor pipeline shipping economics and historically low diesel inventories” which are “combining to cause shortages in various markets throughout the Southeast. These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges,” the company added in its press statement.
However, a tight diesel supply will bring prices up, eventually making diesel too costly for many consumers, the fuel logistics company ventured. Looking ahead, it suggested that high prices would lower demand enough to “balance it with limited supply."
Bulk fuel buyers were urged by Mansfield to avoid panic buying ahead of checking first to ensure their orders will fit in the storage tanks.
"That is not to say there will not occasionally be situations where there is a true physical lack of products. Some cities might run dry on diesel for a few days, at least at the terminal level. But the fuel supply chain is dynamic, and suppliers will rally to fill in any gaps in supply," the press release stated, concluding that, "Higher prices will simply get passed on to consumers."
Mansfield explained in a memo on October 28 that the East Coast relies on just two pipelines and is supplied by Gulf Coast refiners that have no difficulty redirecting supplies to other countries for a profit. It was also added that while American diesel markets could feel relatively comfortable when inventories were at around 35-40 days, a 25 days’ supply was a critically low fuel level.
Previously, the Energy Information Administration (EIA) had warned in its report that the US East Coast’s gasoline stockpiles were at their lowest since 2007. Challenges of moving fuel from the Gulf Coast refining hub to domestic consumer centers dotting the East Coast make exporting the fuel to other countries more profitable for companies, experts were cited as saying. As some East Coast terminals were forced to ration fuel supplies, exports of gasoline and diesel had spiked to reach two-week highs, the Energy Information Administration said on October 26.
The low fuel inventories and the high costs at the pump have been worrying Democrats ahead of the November 8 midterm elections. The fuel issue could become a make or break one for the Biden administration, deciding whether or not the Democrats maintain control over Congress. Fuel costs in key swing states have been tied to Democrat approval ratings, which have taken successive hits. Diesel prices reached a national average of $5.309 per gallon as of October 31, compared to $3.634 a year ago, according to data from the American Automobile Association (AAA). In June, diesel reached a record-high average price of $5.703 a gallon.
Faced with looming midterm elections, Democratic POTUS Joe Biden has been trying to address the challenges amid low stockpile levels and a limited ability for companies to boost their supply. Trying to appease voters, he had resorted to unprecedented crude releases from the US strategic reserves, while also pressuring oil companies to boost production and threatening them with a windfall tax.
With days to go before the midterms, the Democrats and Republicans faced neck-and-neck races for Senate control, a Times/Siena College Poll showed. As for Joe Biden’s job approval rating, it has been consistently below 50 percent in all the states most likely to determine the Senate majority, according to public polls cited by US media.