WallStForMainSt: Global Diesel Supply Problems Continue to Get Worse?
Most investors think about energy in terms of their home utility bill and gas prices at the pump. But there’s another form of energy that’s key to our lifestyle today. That energy is diesel fuel.
It’s crucial because all goods are shipped by truck at some point. And trucks run on diesel. While oil prices jumped at the start of Russia’s invasion of Ukraine, gas prices spiked and came back down. But diesel prices remain at elevated levels.
Unfortunately, that trend looks on track to get worse, not better. Global trends, including the ongoing conflict in Europe, point to reduced supply amid high demand. That’s similar to the situation with natural gas.
Both diesel and natural gas could also pose problem in the densely-populated Northeastern United States. This area has underbuilt pipelines and infrastructure.
As natural gas can now be exported from the United States, that commodity can now be sold on the global market. So the price differential between the US and the rest of the world should narrow. That could also create lower supplies in the US if needed.
Overall, it’s clear that cheap energy may not be the case this winter. Some parts of Europe have already seen an explosion in prices.
That could happen in parts of the US as well. Even in a land of energy abundance, global supply and demand, as well as local factors such as infrastructure, can weigh heavily on price.