The diesel fuel shortage could cause real problems for the economy... and Biden and Dems

And of course conservatives are griping about this big time and naturally blaming Biden.

https://oilprice.com/Energy/Gas-Prices/Four-Reasons-Why-The-US-Is-Grappling-With-A-Diesel-Shortage.html

Four Reasons Why The U.S. Is Grappling With A Diesel Shortage
By Robert Rapier - Nov 05, 2022, 4:00 PM CDT

Distillate levels in the United States have plummeted to the lowest levels since 2008.
Low distillate inventories have sent diesel prices soaring.
Four primary factors lead to this shortage.

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https://www.washingtonpost.com/business/energy/what-backwardation-has-to-do-with-us-diesel-squeeze/2022/10/21/6c8fe9c2-5149-11ed-ada8-04e6e6bf8b19_story.html

A crisis is once again brewing in the US for the diesel fuel that powers trucks and heats homes. Global shortages and a market phenomenon known as backwardation are frustrating Biden administration efforts to bolster dangerously low domestic inventories and keep prices from soaring as winter approaches. Officials are now considering steps like export restrictions that would be unprecedented -- and that critics say could well backfire.

1. What’s happening?

The country is down to 25 days of diesel supply with stockpiles at their lowest level for this time of year in records going back to 1993. In the Northeast, where more people burn fuel for home heating than anywhere else in the country, inventories are a third of their typical levels heading into winter. National Economic Council Director Brian Deese called the levels “unacceptably low.” By late October, diesel prices had risen for more than two weeks to 50% above where they were a year ago.
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2. What does backwardation have to do with it?

Backwardation and contango are names for curve structures that map traders’ guesses about what a given contract will be worth in the future. In the former, the curve is downward sloping, meaning prices are expected to fall in the future; in the latter, it’s the reverse and upward sloping. Right now, traders are paying more for prompt deliveries than longer-term ones. This backwardated market structure incentivizes suppliers to sell now instead of holding onto the product -- the opposite of what President Joe Biden wants them to do.

3. How is that driving markets?

In October, the diesel curve had become so backwardated that sellers risked losing as much as 30 to 40 cents a gallon holding onto the product until the next month, compared with less than 1 cent at the same time last year. Not only was the spread unusually large, but the backwardation had lasted unusually long: Typically the diesel market flips into contango in the summer, allowing suppliers to replenish fuel ahead of peak harvest and heating season. This year, that never happened.

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https://www.wesa.fm/2022-10-29/how-the-diesel-shortage-is-being-felt-globally

If you've been paying attention to prices at the pump, especially if you use diesel, you probably already know this. There's a big difference between the price of gasoline and diesel. That's because right now, the U.S. is experiencing one of the biggest shortages of diesel since 2008. Currently, there are only 25 days of supply left, and that number is dropping fast. And this matters even if you don't use diesel yourself, because it's an essential part of the supply chain. And as temperatures begin to drop, thousands of households across the country will be using it as their primary source of heat.

So what will it mean if things continue like this? And will we see something like this happen to gasoline? To help us think about this, we have Chunzi Xu. She covers the oil industry, particularly refined products, for Bloomberg News. And she is with us now. Chunzi Xu, thank you so much for joining us.

CHUNZI XU: Hi. I'm glad to be here.

MARTIN: So can I just start off with a basic question for people who aren't familiar with this? What exactly is diesel, and why is it so important as an energy source?

XU: Diesel is the fuel of the economy, and it's in just about everything that we use. The bulk of manufactured and retail goods move day and night on trucks and trains powered by the fuel and manufacturing. Farming and heating also relies on diesel. And diesel is so deeply embedded in American life that its consumption is often seen as a barometer of the country's overall economic activity. Without it, the supply chains would collapse, and things simply wouldn't work.

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https://www.reuters.com/markets/asia/diesels-gloomy-message-global-economy-kemp-2022-10-14/

LONDON, Oct 14 (Reuters) - Global shortages of middle distillates such as diesel, gas oil and heating oil are intensifying rather than easing – making it more likely a relatively severe slowdown in the business cycle will be necessary to rebalance the market:

U.S. inventories of distillate fuel oil depleted to 106 million barrels on Oct. 7, the lowest seasonal level since the government began collecting weekly data in 1982.
EU distillate inventories were just 360 million barrels at the end of September, the lowest seasonal level since 2004.
Singapore mid-distillate inventories have fallen to just 8 million barrels, the lowest seasonal level since 2007.

The global petroleum and refining system has proved unable to keep up with rapid growth in fuel consumption as a result of the manufacturing and freight-led recovery after the coronavirus pandemic.
REFINERY LIMITS

The immediate bottleneck is the lack of enough distillation and catalytic cracking capacity to make middle distillates from crude (“Oil refining industry insights”, International Energy Forum, Sept. 2022).
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https://news.google.com/search?for=diesel+fuel+shortage&hl=en-US&gl=US&ceid=US%3Aen