Diesel Prices Rise Due to Refining Capacity Crisis
Diesel prices have climbed above $5 per gallon, driven by a refining capacity crisis rather than crude oil shortages. Aaron Decker of Multi-Service Fuel Card explains that low distillate inventories and elevated crack spreads—now over $100/barrel—are the main issues. Ukrainian drone strikes on Russian refineries and high U.S. Gulf Coast diesel exports are exacerbating global supply constraints. The Russia-Ukraine conflict, which began in March 2022, has had a lasting impact on fuel markets by keeping crack spreads elevated. Decker warns that hurricane season could further disrupt refining operations along the Gulf Coast during Q3 and Q4. He also notes that most carriers are not paying full retail diesel prices—less than 10% according to his estimate—which may affect how accurately fuel surcharges reflect actual costs.
Topics: Crack Spreads Diesel Prices Distillate Inventories Refinery Capacity Russia-Ukraine Conflict