If you think things are bad economically now, hang on to your halo. We are facing a perfect storm for our supply chain within the next month unless several things change dramatically.
It’s been one thing after another ever since the Covid pandemic began to affect our supply chain back in 2020. To be clear, you don’t have to believe that a pandemic existed, that the virus was serious, or even that the virus existed. That isn’t what this article is about. Regardless of one’s feelings, it was a trigger for an economic disaster that has continued to snowball.
We watched the shelves in America get cleared in a day in March of that year, and things have never been the same since. Global shipping all but shut down.
And the prices went up.
Farmers could not harvest their food or get it processed and ready to be delivered to stores.
And the prices went up.
Then the cost of fuel skyrocketed.
And the prices went up.
And now, we’re facing a new challenge in what can only be described as a looming transportation collapse. Two things are slated to happen within the next month that could make what we’ve experienced so far look like a walk in the park.
1.) We have 25 days of diesel fuel left.
2.) Biden has failed to come to an agreement with rail workers’ unions, and a strike could start as soon as November 19th.
Let’s take a closer look at each of these factors.
The diesel fuel shortage
The diesel fuel shortage that is looming could be absolutely catastrophic. The fuel of trucks, trains, and ships – this could put a real kibosh on the transit of goods. What’s more, the diesel shortage also affects home heating fuel.
A shortage of diesel fuel is spreading across the United States, with one company launching an emergency delivery protocol, requesting a 72-hour advance notice from clients to be able to make the delivery.
Per a Bloomberg report, fuel supplier Mansfield Energy wrote in a note to its clients that “conditions are rapidly devolving” and “At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity.”
Some are blaming this shortage on a lack of refining capacity. If you look more closely at this, refineries are closing down in direct response to the current administration’s new policies to move the country to green energy.
Phil Flynn, an analyst for Fox News, said:
Phil Flynn, a senior account executive/market analyst at the Price Futures Group and FOX Business contributor, warned that strict regulation under the Biden administration will continue to put pressure on refineries to stay in business.
“It wasn’t too long ago the country was clamoring for the industry to buy and build new refineries because they couldn’t keep up with demand,” Flynn said Monday.
But government pressure to wean the country off of fossil fuels has made business difficult, with Flynn arguing that “refineries are getting squeezed out of business because of stricter regulations from the Biden administration and the pressure by the government” to “reduce demand for gasoline.”
If we actually run out of diesel fuel, the result on our supply chain would be catastrophic. We could expect shelves to empty and cargo ships to divert from America to places that have a better chance of delivering the goods. What’s more, prices would skyrocket on any good that has to be transported – which is basically all of them. If you can find it at all, it will cost significantly more.
What is being done about this?
It’s pretty hard to solve a problem created by bad policies. It’s not something you can undo overnight. Yahoo News reports on these potential actions that could be taken to try and lessen the blow.
Deese adds that the Fed has some tools to bolster diesel supply, like the Northeast Home Heating Oil Reserve, which houses one million barrels of diesel in case of a disruption in supplies.
“We have looked very carefully at being prepared to deploy as and when necessary,” he said.
But The Washington Post reports that diesel demand is so high, that if a million barrels of diesel were delivered from the Northeast reserves, they would be depleted in less than six hours.
The Biden administration also recently announced it would be tapping into the country’s emergency oil reserves to counter rising gas prices, despite concerns over the long-term efficacy.
White House officials haven’t completely ruled out fuel export restrictions either, but the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers sent out a joint letter expressing their concerns in early October.
“Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices and alienate U.S. allies during a time of war,” the group wrote.
(Now’s a good time to check out our free QUICKSTART Guide to building a 3-layer food storage system.)
The potential rail strike
Next, we have the possibility of a rail strike. This crisis was narrowly averted back in September when Biden and union representatives reached a tentative agreement. At the time, Biden hailed it as “an important win” for the American people, but it looks like the win was only a temporary kicking of the can.
Brotherhood of Maintenance of Way Employees Division has rejected the deal offered last month, putting a strike back on the table.
The Washington Post reports:
…many union members were skeptical from the start, with some telling The Washington Post that the details were opaque. The plan included a 24 percent pay increase by 2024 — bringing the average wage to $110,000 a year — and $1,000 annual bonuses for five years. It also ensured health-care co-pays and deductibles would not increase.
But it seemed to include only one paid sick day, even after union leaders had pushed for 15.
“Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued,” BMWED President Tony D. Cardwell said in a statement Monday announcing the vote outcome. “They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness.”
The tentative pact stemmed from two years of negotiations between the carriers and unions, and the White House appointed an emergency board in early July to mediate. One of the sticking points was a points-based attendance policy adopted by some of the largest carriers earlier this year. Those policies can penalize workers for missing work for routine doctor’s appointments or family emergencies.
Unfortunately, that “win” wasn’t so much a victory as it was a temporary reprieve. Apparently, the decision of this union was a shock.
“For the first time that I can remember, the BRS members voted not to ratify a National Agreement, and with the highest participation rate in BRS history,” said Michael Baldwin, President of the BRS, in a statement.
Two of the biggest unions have not yet voted, and their decision could doom us to a railway shutdown. The deadline to reach an agreement is November 19th.
What would happen in the event of a rail strike?
Edward Segal of Forbes.com has been carefully watching this situation.
As I wrote last month, “Had the national railroad strike become a reality [in September], the labor stoppage would have created another crisis for thousands of companies and organizations. The impact on companies, organizations and fragile supply chains would have depended, of course, on the duration of the strike.”
Another factor company executives should keep in mind if there’s a strike is the reaction of consumers.
“After nearly three years of supply chain delays and asks for ‘understanding’ during difficult times, customers are facing supply chain fatigue,” Kushal Nahata, CEO of FarEye, a last mile delivery management company, said via email.
“The patience they had during the early days of the pandemic is waning, and the overall sentiment is that companies should be able to plan accordingly and have solutions readily available,” he advised.
Companies “should adapt their logistics models so [that] very little disruption is felt by their customer base. If they don’t, customers have no problem moving onto another brand that can— nearly 90% of customers will abandon an online retailer if they see poor delivery terms,” Nahata warned.
Segal isn’t wrong. We, the consumers, are sick of paying through the nose for terrible policies that have caused this economic disaster.
But, yet again, the decisions are out of our hands.
How do you prep for something like this?
How on earth do you prep for a transportation shutdown, especially after the past two and a half years? The supplies in stores are depleted and expensive; many of us have consumed a portion, if not all of our existing supplies; and Americans are broke.
Unless you are one of the people fortunate enough to be in a position to do so, you can’t buy your way out of this problem.
My suggestion is to consider the things you truly cannot get by without: medications, special foods necessary to your health, and any other essential item you must have, and focus your resources on these things. This isn’t about “wants” and “comforts.” It’s about “needs.” Be sure that you are clear on the difference. If we get lucky and these issues are resolved without a transportation collapse, you know you didn’t purchase a bunch of stuff you’ll never use – you got the things that are necessary.
As for everything else, we’re going to have to focus on being the most adaptable and resilient versions of ourselves. We are going to have to learn to live with different options at the store, making do, and doing without.
While we aren’t surrounded by marauders, and we still have power, this is the scenario we’ve been prepping for, and I believe that we, as preppers, are mentally ready to survive this. It won’t be easy, but we have the advantage – we knew it was going to happen. We didn’t know for sure what it would look like, but we’ve known for years that this kick-the-can economy was hanging on by a thread.