Global diesel shortage: causes, price rises and possible ways out

Centre · 1Diesel is in short supply worldwide, and The National's analysis by Robin Mills says two major wars have disrupted deliveries of the fuel. 1 Centre · 1According to the analysis, average US diesel prices have risen to $6.18 per gallon from $3.48 at the start of the year, and in the UAE diesel rose from Dh2.55 per litre in January to Dh4.80 this month. 1 Centre · 1The piece says the problem predates the wars: crude oil was ample but refining capacity was limited, with about 30-32 of nearly 100 European refineries closed since 2009 and six of eight in Australia this century. It attributes the closures mostly to high energy costs, declining domestic markets and competition from newer refineries, not to "net-zero" policies. 1

Centre · 1The war in the Gulf worsened this: Iran and its allies in Yemen and Iraq have attacked new Gulf refineries built mainly for diesel and jet fuel, and strikes in the Strait of Hormuz limit exports. Bapco in Bahrain is back to about three-quarters of operations while Jazan in Saudi Arabia remains shut. 1 Centre · 1Ukraine's long-range attacks on Russian refineries have cut Russian diesel exports from about 1 million barrels per day to almost zero, according to the article. 1 Centre · 1The White House has suspended sanctions so the US can import 2.25 million barrels of Russian diesel, with the first vessel of 300,000 barrels due in New York on November 7. The article says this is about 7 per cent of the global deficit and that Kyiv hit the St Petersburg refinery after a brief pause from October 10. 1

Centre · 1Other supply options are described as limited: India's diesel exports are near 750,000 barrels per day, China banned fuel exports after Donald Trump asked Xi Jinping for more diesel on September 24, and Trump invoked the Defence Production Act, which the author says will come too late or be too small. French President Emmanuel Macron secured commitments from the UAE, Saudi Arabia and Bahrain to supply more diesel. 1 Centre · 1Mills argues demand cuts are more promising, though they should have started eight months ago: replacing diesel vehicles and heating oil use, and swapping diesel generators for solar and batteries. He notes China's electrified high-speed rail and switch of buses and lorries to gas and batteries. 1 Right · 1Separately, Hot Air, a US outlet, says diesel used to be cheaper than gasoline but now costs considerably more. It argues that while economics sets prices, chemistry is a major factor, especially the difficult and expensive removal of sulfur. 2