Larry C. Johnson: America’s Diesel Surplus Is an Illusion (An Update from Karl Miller)

On paper, the United States should be the world’s safety valve in this fuel crisis. American refineries make far more diesel than Americans burn. But every one of those barrels is already spoken for. Between rising domestic demand, heavy export commitments and refineries running near their limit, the U.S. is drawing down its own stocks, not sitting on a surplus. And as Karl W. Miller shows in his latest assessment, dated September 29, the shock from the Gulf hits the world’s fuel supply twice: it starves refineries abroad of crude and removes finished fuel from the Gulf’s own refineries. America has no spare diesel to offer a world that has lost 1.6 million barrels a day of diesel exports from the Gulf and Russia combined. Until finished-fuel supply recovers, the gap will be closed by higher prices, less economic activity, or both.

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