Diesel inventory hit a new low late last week. According to USA Today, there’s about a 26-day supply available. That puts diesel fuel 20% below the five-year average supply.
Diesel prices and inventory levels affect a variety of industries, including agriculture, shipping, domestic energy production and more.
Read more: Rising input costs causing unease for farmers
Business Economics Professor at IU’s Kelley School of Business Phillip Powell said heavy economic activity coupled with the global energy crisis are to blame.
“The higher prices obviously are linked to the global energy shortage, which is linked to the war in Ukraine,” he said. “Also, economic activity has been very heavy, there's been a lot of demand. And, so both restricted access, and more folks wanting to buy it is going to naturally lead to higher prices.”
It’s important to note that the supply being down to 26-days doesn’t mean that we’ll be out of diesel in that time.
“Any industry always keeps a safety stock in place,” Powell said. “And, so it's measured in terms of days of current consumption. So, what happens as inventories fall, prices go up. And as prices go up, it actually slows down consumption.”
Powell doesn’t believe that diesel supplies will empty anytime soon, but he does caution that as the price increases, people may have to be wise about where their money goes.
“This means that if I'm worried, I need to be more worried about how I'm going to adapt,” he said. “And if I'm a business, I'm perhaps going to ship fewer products, or I'm going to raise the price and pass that price along to my customer. It might mean higher energy prices to heat our homes.”
Powell says that some sort of peace deal in the Ukraine or a boost in gasoline output from Saudi Arabia would help increase access and lower prices worldwide.
Until then, as we head into what is forecasted to be a cold winter, you might want to think twice about turning up that thermostat.
