The last month or so the Biden administration has been under fire for releasing millions upon millions of oil barrels from the nation’s reserve supply. The most recent one was announced to the tune of 15 million.
And while the number is rather large, most Americans do not realize that is not that much compared to what is consumed in just a single day. According to the U.S. Energy Information Agency (EIA), the average number of barrels of oil consumed in 2021 was 19.78 million barrels per day (b/d), with roughly a million or so attributed to biofuels. Worldwide, 97,103,871 b/d are consumed around the world.
So while a 15 million barrel release sounds grandiose, in reality, its effect will only have a fractional acute benefit, if that at the very most – just like all other prior releases this year and last, that received significantly less attention.
But both mainstream and alternative media have been making a big stink about these oil reserves, but are not focusing on a much more precarious situation: the U.S. is reportedly down to only a couple of weeks or so before the nation is drained of its diesel fuel supply. As ZeroHedge put it, ‘the real crisis is not oil or gas, but diesel.’
Moreover, ZeroHedge reported on the dwindling diesel supply at least ten separate times, going as far back as February.
Currently as demand increases, mainly due to the seasonal shift, supplies are currently at the lowest they have been this time of year ever per official government data released last week.
When ZeroHedge first reported this news one week ago, the EIA said in a statement that the U.S. has just 25 days of diesel supply, the lowest since 2008. Now it would be 18 days instead. ‘And while inventories are [at a] record low, the four-week rolling average of distillates supplied – a proxy for demand – rose to its highest seasonal level since 2007,’ ZeroHedge added.
ZeroHedge lamented, ‘In short, record low supply (courtesy of stifling regulations that have led to a historic shortage of refining capacity) meet record high demand. What comes next is, well, ugly (while weekly demand dipped slightly in the latest week, it’s still at highest point in two years amid higher trucking, farming and heating use).’
Such low levels are alarming because diesel is the workhorse of the global economy. It powers trucks and vans, excavators, freight trains and ships. A shortage would mean higher costs for everything from trucking to farming to construction.
The diesel crisis leaves the Biden administration facing very difficult choices. If he leaves the market alone, prices are likely to rise further before they drop; if he intervenes, either setting up minimum inventory levels or restricting exports, price increases will likely be felt elsewhere into the world. Either route will have big implications for inflation at home and for energy security in Latin America and Europe.
The timing of today’s diesel crisis couldn’t be worse.
Javier Blas for Bloomberg added
Currently the price of a barrel is sitting at $224, according to OilPriceZ. As to be expected refiners are profiting greatly from this.
ZeroHedge explains 4 reasons why the diesel supply is at where it’s at:
- First, local diesel demand has recovered quicker than gasoline and jet-fuel from the impact of the pandemic, draining stocks.
- Second, foreign demand is also strong, with American diesel exports running at unusually high level.
- Third, and according to many, most important of all, the US also has lower refining capacity than before, reducing its capacity to make fuels.
- Fourth is Russia’s invasion of Ukraine. The US was importing a significant amount of Russian fuel oil before the war, which its Gulf of Mexico-based refiners turned into diesel. The trade ended after the White House sanctioned Russian petroleum exports.
SEE: Senate Votes 100-0 To Permanently End Trade With Russia And Bans Oil Imports. Biden To Soon Sign, and India Is Buying Up Cheap Russian Oil And Then Reselling It At Higher Prices To US And EU. UPDATE: Russia Becomes India’s 2nd Largest Oil Supplier
America has been backed into a corner with very limited plausible options, but ZeroHedge lists 4 different options the Biden administration could take:
- The White House can let the market continue doing its job, with surging prices likely denting consumption and boosting supply. With refineries enjoying sky-high margins, more diesel should be coming. But the cost of the laissez-faire approach is higher inflation and a much faster recession as US industries shut down. Because diesel increases trucking costs, it’s a particularly pernicious sort of inflation as it quickly embeds into everything that needs to be transported, lifting core inflation measures.
- If the White House opts to intervene, the less harmful measure would be to release a small reserve of diesel that the government keeps for emergencies (clearly they have no problem doing that). The Northeast Home Heating Oil Reserve only has one million barrels, so it would be, at best, a Band-Aid. But it’s better than nothing, and Biden should order its release. For those asking, releasing more crude from the Strategic Petroleum Reserve would do little to resolve the problem, since the bottleneck is refining.
- Other interventions would have significant consequences, potentially harming American allies. In Washington, officials are mulling restricting, or even banning, diesel exports. If the measure is approved, it would leave neighbors including Mexico, Brazil and Chile short of diesel. In July, the last month with available full data, US diesel exports to Latin America hit a record high of 1.2 million barrels, double the amount a decade ago.
- Another option is forcing oil companies to build up stocks quickly ahead of the winter by setting a minimum inventory level, similar to what the European Union did for natural gas stockpiles. US officials are particularly worried about the northern part of the US East Coast, where inventories are low both seasonally and in absolute terms. The region, known in the industry’s jargon as PADD1A, is where the greatest demand is: Of the roughly 5.3 million households that use heating oil in America, more than 80% are in the Northeast. The problem with a mandatory minimum stock level is that it would force American refiners to import more or reduce their exports — or both. The impact in Latin America would be noticeable. Prices in the US may decline, but they will soar elsewhere.
AUTHOR COMMENTARY
Unless a rabbit is pulled out of a hat, the effects of this will be massive. The costs of everything will only ratchet up higher and higher, and shortages and delays will become even more prominent and pronounced, as there is no real way to get ourselves out of the pickle the country is in. This is also why the media is diverting nearly all the attention on the oil reserves and not the diesel crisis.
This is why earlier this year, and last, I had talked about acquiring a small backstock of fuel. It is for quagmires like this is why I said that. No, it is not a fix-all approach, neither is it long-term, but it can help sustain yourself for a little bit, especially when prices go to the moon.
There are no good solutions here. But these actions are not negligent, they are deliberate, as this is a very obvious climate goal these elitists want.
The wicked worketh a deceitful work: but to him that soweth righteousness shall be a sure reward.
Proverbs 11:18
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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Better have some food stocked away that is all we can do at this point. and pray to the LORD
Best have a way to heat your home independent of the electric grid, a small solar generator kit for emergency lighting and communications if you want, as well as plenty of emergency provisions such as food, water, water treatment options, medicines/herbs, and printed materials, more specifically a King James Bible as well as anything related to emergency procedures and wild edibles.
Also make sure you have the audio sermons you constantly go back to recorded on at least two MP3 players and audio disk if you still use that. If things continue to degrade than those might become unavailable in the near future, especially if the west has to begin rationing which servers and sites can remain up. They may do that without a need anyways as an excuse to censorship.
Now if this turns out to be nothing worse than a close call…well that means you have that much more time to get ready for the one that isn’t so much of a close call.
Well said. I am glad someone gets it. I get these ankle biters telling me that I am a heretic for telling people to use common use and prepare for a rainy day. The ignorance and arrogance of man ceases to amaze.
The UN globalists and their climate change goals. I cannot fathom the greed that motivates these monsters to turn the entire world upside down so they can unleash their oppressive carbon tax scams on an uninformed and compliant public. Won’t it be nice when the unrepentant ones are finally burning in hell, and where they will not have to worry about climate “change”. The temperature will be a constant “Hot” with no chance of precipitation. I do not think we are to pray for this nation anymore, but I do pray for the true Church within it for their safety and discernment.