Diesel Prices Soar Past $6 as Global Refinery Outages Take Hold
US diesel prices have reached record nominal levels, exceeding $6 per gallon on average. This surge is not solely due to expensive crude oil. Rather, America's comfortable diesel stock levels are dwindling, while global refinery outages send more US fuel overseas.
Average diesel prices rose about 68% above a year earlier, reaching around $6.29 per gallon, as reported by Reuters. Farmers, who rely heavily on diesel for tractors, combines, irrigation equipment, and trucks moving crops to market, are among the first to feel the impact of these rising costs.
US refineries produced an average 5.1 million barrels of distillate daily between January and August, a level not seen since 2019. However, the issue lies in what happened around this production. Global supplies of diesel and other distillates have tightened due to refining activity falling in Russia, China, and the Middle East.
As a result, US net exports have been at or above their five-year high since February. Domestic inventories did not build up during the summer, with September 11 inventory levels being 15.8 million barrels, or 13% below the five-year seasonal average.