(NAFB News Service) Diesel fuel is at an all-time high of more than six dollars a gallon as farmers begin a busy harvest season.. Patrick DeHaan, the senior petroleum analyst for GasBuddy.com, said the price for fuel in the U.S. is hard to swallow.
“Yeah, I know they certainly are, and it’s not getting any better. New escalations, two new refinery attacks in Russia. That has been, by the way, the reason that diesel has nearly completely disconnected from the broader market. It’s been these very effective Ukrainian drone attacks on Russian refineries. It’s been so impactful. It’s pushed up global diesel prices. It’s causing headaches in Russia. Gas line rationing is happening in Russia, and as a result, there’s not enough diesel supply now, globally. And that’s why you and I are feeling the pain at the pump, especially because these drone attacks are knocking offline refining capacity.”
The U.S. and Iran war isn’t helping either.
“Of course, there are plenty of other escalations in the Middle East as well. The U.S. and Iran. The Houthis are trying to shut down the Red Sea. A new attack on the Saudi East-West pipeline, a vital oil pipeline the Saudis have been using to avoid the Strait of Hormuz, could now be shut down for several months. None of this is good news, but that’s about the worst possible news, and all of it is fueling what you and I pay at the pump, especially for diesel. Diesel is very much beholden to Russian refineries. Traditionally, Russia produces one out of every nine barrels of diesel globally, and now that number is zero, and that is why diesel is ripping in the market.”
We’re paying more for gas and diesel because they are both a global market.
“Yeah, that’s really it. It’s not price based on what’s just happening in the U.S. This is a global issue right now, and that is what we are paying more for. In addition, U.S. refineries have no slack right now. U.S. refineries have been operating at 98 percent of available capacity. In the Midwest, they’ve been operating at over 100 percent. Like many people, if you’re skeptical of how the heck they can do over 100 percent, well, it’s something called process gain, meaning that there is no margin for error.”
Recent refinery issues mean fuel prices likely will continue higher.
“A couple of refinery issues did develop. Also, other refineries are doing maintenance. Just about everything is going wrong that could potentially happen, and so the prognosis is not good. Gasoline and diesel prices are going to continue to advance. Diesel could hit even $6.50 or $7. I don’t have a crystal ball, so I don’t know how much worse it’s going to get, or what new escalations could look like. But there’s just really nothing that looks good in the market right now.”
Again, that’s Patrick DeHaan of GasBuddy.com.
