The US is over a barrel. Already the biggest oil producer in the world, it can't turn out more diesel. Prices for the fuel used mostly by truckers and freight have risen about twice as fast as gasoline pumped into autos since the start of the Iran conflict in February.
The problem is refining. The spread earned from producing it from crude is at a record, so companies like Marathon and Valero are earning bumper profit. Yet US facilities are operating at 97% capacity.
The last refinery was built about 50 years ago. Considering a new one can take a decade to complete and domestic fuel demand peaked years ago, no reinforcements are coming. High prices also provide temptation to postpone maintenance, which can cause longer shutdowns.
The US is the largest exporter of diesel, which prompted majority Senate leader John Thune to mull last week on whether these sales should be banned. On Saturday, Iowa Senator Chuck Grassley called for one.
The Trump administration shot down the idea, at least for now, saying it probably wouldn’t lower prices, but cause retaliation. That would lead the overall system, which has too little refining capacity worldwide, to operate less efficiently. Full story Diesel could be the tipping point for US economy | Reuters
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