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The U.S. is running low on diesel fuel and the impact on Canada


EIA reported that distillate inventories were at their lowest levels since 2008. Distillate fuels include diesel fuel and heating oil.

Diesel overview

Firstly, the price of diesel fuel is rising. According to U.S. Energy Information Administration, the country only has stored 25 days’ worth of diesel fuel.

Secondly, diesel fuel powers some of America’s most important industries. Trucking, farming, and construction could all experience serious issues.

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Thirdly, diesel prices are soaring. Last year the diesel price started at $3.35 in Florida. The cost of diesel is now over five dollars. Truckers said if it goes any higher, it could affect their ability to deliver goods.

Will Canada be impacted?

Also, diesel prices in Canada remain elevated as U.S. inventory levels for the fuel sit at their lowest level in decades.

Known as the fuel that powers the economy is relied upon not only by drivers but industries such as farming, transportation, and shipping, in the whole country.

Demand for diesel fluctuates throughout the year, but to see U.S. distillate inventories at record lows for this time of year is “troubling.

Carol Montreuil, vice president of Eastern Canada and economics at the Canadian Fuels Association.

U.S. inventories are down compared to the usual numbers we would see at this time of the year at the start of the heating season.

Low inventories

However, producers have kept up with unprecedented demand for fuel as the world began to emerge from COVID-19 lockdowns. Furthermore, Russia’s war in Ukraine has shaken the global economy. In addition, the western nations move to punish Moscow with sanctions and distance themselves from relying on Russian oil. The situation increased the demand for oil elsewhere.

Canada is a large producer and net exporter of diesel. According to the most recent data from Statistics from July 2022, diesel inventory levels have been stable over the past year.

Conversely, the U.S. distillate fuel inventories increased by 400,000 barrels last week. They are about 19 percent below the five-year average for this time of year.

Finally, low diesel inventories in the U.S. are likely to continue driving up prices for Canadian consumers.

Get more information about EIA, here.

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