October 25, 2022
Diesel Inventories Impact Prices & Inflationary Pressures
AF Editor Mike Antich offers insights into current industry conditions in the 118th State of the Fleet Industry video, produced by Automotive Fleet.
🎙Today's topics include:
- On average, diesel stockpiles today are 30% lower than what they have traditionally been at this time of year. As of Oct. 21, diesel supply in the U.S. is down to 25 days, which means diesel inventories are at their lowest level for this time of year since 2008.
- There is a direct correlation between the low inventory of diesel and the price at retail pumps. This low supply is exerting upward pressure on the price of diesel, especially since there is an ongoing strong demand for the product.
- When diesel stockpiles contracted in April and May 2022, it created upward pressure on retail prices. In May 2022, No. 2 diesel hit an all-time record retail price of $5.51 per gallon.
- The higher cost of diesel creates inflationary pricing pressures. For instance, when the cost to transport goods increases, those increased costs are passed on to end-users.
- What will ultimately bring down the price of diesel and increase the inventory of diesel fuel will be the recession that everyone is predicting. A recession would slowdown in end-user demand and industrial activity, which, in turn, will put downward pressure on fuel consumption.
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