(Photo by Leon Neal/Getty Images)
President Joe Biden is proposing a plan that would require fuel suppliers to maintain a minimum amount of diesel in their inventories this winter to stave off severe shortages and prevent extreme price hikes. However, it could create a demand surge and drive up already high prices, according to Bloomberg.
The plan would force diesel vendors to take supplies off the market which could cause short-term diesel demand to soar and drive up prices in the Northeast, where fuel shortages are most severe, according to Bloomberg. Russia’s invasion of Ukraine has exacerbated the East Coast’s fuel shortages as the region has become dependent on Russian imports due to the region’s constrained pipeline capacity.
“We also want to make sure there’s enough fuel in the United States,” Energy Secretary Jennifer Granholm said when asked about U.S. fuel exports to energy-starved Europe during an interview at the COP27 climate conference in Egypt. “It may not be a business choice that they make, but we’re asking, as the companies that are operating in America, to do what they are doing in other countries.”
The national average price of diesel is $5.31 per gallon and is $1.58 higher than it was in November 2021, according to the Energy Information Administration (EIA). The Midwest region’s wholesale diesel prices skyrocketed in July after pipeline operator Magellan Midstream Partners increased the minimum inventory levels for fuel held throughout its pipeline, according to Bloomberg.
MILL VALLEY, CALIFORNIA – MAY 02: Diesel prices over $6.50 a gallon are displayed at a Chevron gas station on May 02, 2022 in Mill Valley, California. (Photo by Justin Sullivan/Getty Images)
The European Union (EU) required its member-states to fill natural gas storages to 80% of full capacity in order to prepare for potential winter shortages, according to the European Council press release. Europe is currently heavily reliant on U.S. oil and gas imports as Russia has continuously disrupted natural gas deliveries through the Nord Stream 1 pipeline in retaliation to EU sanctions.
Americans who use heating oil (a form of diesel) will spend an average of $2,354 to heat their homes this winter which represents a 27% increase from winter 2021 and the highest price point in more than 25 years, according to the EIA.
The White House did not immediately respond to the Daily Caller News Foundation’s request for comment.