(Bloomberg) -- The diesel shortage that had the White House on edge last week is spreading from the Northeast to the Southeast, prompting at least one supplier to initiate emergency protocols.
“Because conditions are rapidly devolving” fuel supplier Mansfield Energy is now requiring a 72-hour notice for deliveries to secure fuel and freight, according to a note to customers. In areas that are tightest, fuel prices are running 30-80 cents higher than the market average, Mansfield said, adding that Tennessee is “seeing particularly acute challenges.”
“At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity,” the note said.
Diesel inventories nationwide are at lowest seasonal level ever heading into winter, and some areas in the Northeast have already started rationing fuel. The shortage is almost certain to drive up prices for the heating and trucking fuel, further straining household budgets.
Supplies are on the way but not fast enough. The Colonial pipeline, the main source of supply for Southeast markets, recently became fully booked to move diesel, heating oil and jet fuel. But the first full cycle will not hit Atlanta till Nov. 3, and will reach the New York Harbor area a week after that, according to the latest pipeline schedule. And while New York is set to receive several overseas cargoes, they won’t arrive until the end of this month.
The scarcity has prompted some traders to take physical delivery of fuel off the Nymex contract, turning the financial tool into an unusual source of supply. Those deliveries will take place in the first-half of November.
©2022 Bloomberg L.P.