Home Diesel Diesel Rationing Could Hit East Coast This Summer, Refinery Owner Says

Diesel Rationing Could Hit East Coast This Summer, Refinery Owner Says

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By Alyssa Sporrer of FreightWaves,

The East Coast of the U.S. could face a worsening diesel shortage this summer, John Catsimatidis, CEO of United Refining Co., said in an interview with Bloomberg. United produces some 70,000 barrels of petroleum products each day and sells gasoline throughout western New York and northwestern Pennsylvania, according to the company’s website

“I wouldn’t be surprised to see diesel being rationed on the East Coast this summer,” Catsimatidis told Bloomberg’s Lucia Kassai.

“Right now inventories are low, and we may see a shortage in coming months.”

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Diesel prices hit a new high of $5.557 a gallon on Thursday, according to the American Automobile Association. Unleaded gasoline also hit a record $4.418 per gallon.

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Carriers and owner-operators — especially those with already-slim margins — are struggling to keep up with rising diesel prices.

Catsimatidis said he doesn’t expect the 350 stations United Refining operates to be low on gasoline; it will just be very expensive. “Drivers will pay the highest gasoline prices ever paid for Memorial Day.”

National diesel inventories are the lowest in 17 years, and East Coast stockpiles haven’t been this low since 1990, according to the Department of Energy.

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Several truck stop chains and fuel providers have commented on the possibility of rationing. Pilot Flying J is aware of tight diesel markets, especially in Virginia and Georgia, and is “closely monitoring the situation,” the company told FreightWaves.

Benchmark administrator General Index supplied FreightWaves with an assessment on Tuesday that indicated that tightness in East Coast diesel stocks may be loosening. 

The U.S. has increased diesel exports to help supply Europe with previously Russian-supplied fuel. But higher prices of diesel on the East Coast may impact how much diesel companies send to Europe, where prices are slightly lower, FreightWaves’ John Kingston reported.

On Monday, the General Index price for ultra low sulfur diesel was about $3.90 per gallon in Rotterdam, Netherlands, and $4.30 a gallon on the East Coast of the U.S.

An International Energy Agency report released Thursday indicated that the current diesel crisis may just be at the beginning. It said oil losses from Russian output were about 1 million barrels per day in April, and that number could jump to 3 million barrels per day by the end of the year.

“Limited spare capacity in the global refining system, together with reduced exports of Russian fuel oil, diesel and naphtha have aggravated the tightness in product markets, which have now seen seven consecutive quarters of stock draws,” the report said.

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