The diesel market will stay tight into the winter, Chevron Chairman and CEO Michael Wirth warned.
“Markets are tight right now. Diesel, in particular, as we’ve seen here recently and likely to stay that way through the winter, I think,” he said during the third quarter earnings call.
With the ban on some Russian imports going into effect in the first quarter of 2023, the situation could become worse.
The ban will drive Russian energy products to reach farther markets with increased costs and logistics, he said.
Data collected by the Energy Information Administration (EIA) shows that diesel stockpiles are at their lowest level for October in records that date back to 2008.
The weekly data shows that the United States, as of Oct. 21, has 25.9 days of supply—down from 34.2 days of supply five weeks prior.
National Economic Council Director Brian Deese, a top adviser to President Joe Biden, told Bloomberg News last week that current diesel levels are “unacceptably” low and that “all options are on the table” to increase supplies.
Diesel prices are usually half a dollar higher than gas prices. However, the diesel market seems to have become tighter than the gasoline market since the beginning of this year.
The price difference between diesel and gas increased from about half a dollar to over $1.70 since January.
Diesel Playing Role of Gas
Two reasons caused the tight diesel market, Senior Vice President of the American Energy Alliance Dan Kish told The Epoch Times.
Consumers chose to travel less for shopping because of high gas prices, which drove up the demand for diesel-fueled transportation and diesel prices.
“A lot of people got priced out of gasoline or they’re just not driving as much because it’s more expensive. But they still need to get goods and instead of going into the grocery stores to buy things, they have them delivered. That increases demand for diesel,” he said.
By Allen Zhong
