[The Epoch Times, October 27, 2022](Reported by The Epoch Times reporter Michael Wilkerson / compiled by Takasugi) With theBidenGovernment continues to run out in a dubious gambleU.S.Strategic Petroleum Reserve (SPR), inmidterm electionsfront depressgasoline priceTo win the vote, another U.S. fuel crisis is quietly brewing.
Althoughgasoline priceIt’s true that it has come down from this summer’s highs, butdiesel fuelPrices are still continuing to rise. And more worryingly,U.S.Diesel inventories have fallen to dangerously low levels.
According to the U.S. Energy Information Administration (EIA), the U.S.diesel fuelThe average retail price of the U.S. rose more than 45% year over year to $5.34 per gallon. Wholesale prices for diesel have surged above $200 a barrel in the past few weeks, 92.5% above last year’s levels.
Even more worrying, just last week, the U.S. Energy Information Administration released data showing that the U.S. system had only 25 days of diesel fuel left. Inventories are now at their lowest level since 2008 and the lowest October level on record.
It’s important to note that this comes at a time when diesel demand is at its highest level in two decades, and ahead of what will be a particularly difficult winter.
As long as the market remains in backwardation—that is, current delivery prices are higher than future delivery prices—indicating that shortages persist, inventory rebuilding is unlikely.
The diesel market is important because it is the lifeblood of our economy. Let’s not forget that while gasoline is powering consumers, diesel is powering trucks, tractors and all kinds of heavy equipment, not to mention freight trains and ships. They in turn power and ultimately supply everything we depend on in the modern world.
Whether it’s the U.S. food supply chain, where more than 70 percent of final goods are transported by diesel-powered trucks, or basic agricultural production, where agricultural equipment also runs almost entirely on diesel, or the mining, drilling, and construction sectors, Our key industries depend on diesel. In short, if diesel supplies are cut off, the U.S. economy will collapse.
Other dangers foreseen in the future
While there is no clear link to diesel shortages, the US does face a serious risk of a nationwide railroad strike. Without a deal between the railroads and unions by Nov. 19, the shutdown of the rail system could cost the U.S. economy as much as $2 billion a day, not to mention the inevitable shortages of goods and supply chain disruptions that would result.
The U.S. produces and refines most of the diesel itself, but our ability to increase supply is still limited by limited diesel refining capacity. In fact, U.S. refining capacity has not increased in decades due to onerous regulations.
Therefore, the United States must rely on imports to supplement its energy needs. Against a backdrop of uncertain prospects for war in Europe and an environment in which European countries themselves are facing a severe energy crisis as we enter the winter, this appears to have made the US energy risks even more acute. In the absence of an adequate supply of natural gas, demand for diesel may rise around the world, with countries reluctant to export what little diesel they have.
While this article focuses primarily on diesel supplies, we must also focus on both the crude oil market and gasoline prices.
Global oil supplies remain uncomfortably tight. The U.S. Strategic Petroleum Reserve is now at its lowest level in nearly 40 years. despite this,BidenThe government still plans to continue to consume 1 million barrels of oil reserves per day, and that will continue untilmidterm elections。
and then? The Biden administration says it will replenish the Strategic Petroleum Reserve when oil prices hit around $70 a barrel. But until then, we will be facing a dangerously low emergency supply reserve. As winter approaches and the European energy crisis (and the ongoing Ukrainian war) enters a more dangerous phase, our emergency supplies will remain at less than half capacity.
If we think that the Saudis and their friends in OPEC are treating America badly right now, then only then will we discover the true nature of this beast when we are really vulnerable.
In the best case, we will have the privilege of repurchasing and stockpiling the Strategic Petroleum Reserve at a higher price than we sold it. What is this for? Just to get a few votes in the midterm elections.
What about the worst case scenario? Well, let’s just hope there’s no real energy crisis in the meantime.
Finally, I would like to make a basic point, that is, an energy crisis will inevitably lead to a food crisis. This is an almost immutable law.
The twin dangers of diesel shortages and national rail shutdowns pose a real threat to our food and other supply chains this winter. Note that all of this is taking place with parts of the Mississippi River currently closed.
The Mississippi River is the most important transportation waterway in the United States. But just a few days ago, 700 barges laden with grain and other food items were put on hold due to low water levels caused by the drought.
Currently, threats to the U.S. food supply chain are increasing every week. It’s time for Americans to wake up, pay attention to the issue, and start preparing for a winter that may be different from what they’ve experienced before.
Michael Wilkerson is an investor, strategic advisor and founder of Stormwall. He is the author of an upcoming book, Why America Matters: The Case For a New Exceptionalism, due in October 2022.
This article only represents the views and opinions of the author, and the content is for general information reference only, without any recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning or other personal financial advice. The Epoch Times does not guarantee the accuracy or timeliness of the content of the articles.
Responsible editor: Ye Ziwei#