US Fuel Crisis Deepens: Diesel Hikes, Inflation Looms

The US oil industry is warning that a fuel crisis has already arrived, causing widespread disruptions and price hikes. Chevron CEO Mike Wirth stated that the mechanisms to contain the supply and price shock have largely run their course, leaving the system with limited buffers.

Commercial fuel inventories around the world have been draining for over six months, while strategic crude reserves can't be tapped much further. The situation worsened after a September attack disabled Saudi Arabia's East-West pipeline, sidelining at least 2.5 million barrels of oil a day.

The consequences are being felt by American households, with diesel hitting a record $6.52 a gallon and gasoline rebounding to $4.49. Diesel presents a particularly difficult problem as refinery outages linked to conflicts in the Middle East and Russia squeeze supplies just as American farmers enter the harvest season.

Experts warn that the fuel crisis will exacerbate inflation, which has already risen nearly 30% since the beginning of 2020. The National Energy Assistance Directors Association projects that households relying on heating oil will pay a whopping 31.3% more to heat their homes this winter.