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Diesel Crisis Likely: To accelerate the economy of the whole world, no fuel is needed more than diesel. Trucks, buses, ships, and trains run on diesel only. Apart from this, apart from construction, manufacturing, diesel is also used in agriculture. Diesel is also used to keep houses warm in cold countries. And when the prices of natural gas are skyrocketing, diesel is being used instead of gas in many places. But due to shortage in supply in the coming months, diesel crisis is going to arise in every energy market of the world.
Diesel can be expensive!
Due to the diesel crisis, the prices are expected to increase drastically. Due to which a huge amount may have to be spent to keep the houses warm. Due to the increase in the prices of diesel only in America, the financial burden on the economy there is estimated to increase by 100 billion dollars. Diesel and heating oil stocks in the US are at a four-decade low. There is also a shortage of stock in Northwest Europe. The crisis may deepen further in March 2023 after the implementation of the economic sanctions imposed on Russia. The crisis of diesel can be gauged from the fact that there is such a crisis of diesel in the global export market that poor countries like Pakistan are facing supply crisis for domestic needs. Diesel prices have increased by 50 percent this year in the spot market of New York Harbor, which is the benchmark. The price has reached $ 4.90 per gallon in November, which is double than a year ago. Diesel futures rate in Northwest Europe is $40 more than Brent crude.
Why is there a shortage?
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There has been a reduction in refining capacity all over the world. There are also problems regarding the supply of crude oil. But the difficulties increase when crude has to be refined into petrol and diesel. Refining companies closed many of their less profitable plants after the demand decreased during the Corona epidemic. Since 2020, US refining capacity has decreased by one million barrels per day. So in Europe, refining has been affected due to shipping disruption and workers’ strike. After the stop of supply from Russia, the problems are going to increase further. European countries depend the most on diesel. In February, the ban will come into effect on the delivery of sea routes of the European Union to Russia. But if an alternative to the supply coming from Russia is not found, then the European economy can be badly affected. Europe’s problem may become more serious due to cold. Europe is still importing diesel from Russia, along with it is also being imported from countries like Saudi Arabia, India.
impact on poor countries
The refining companies of India and China will benefit from the crisis of diesel, which will be able to sell at an expensive rate. While it can be difficult for poor countries to buy diesel. For example, Sri Lanka is facing difficulties in buying fuel. While Thailand has reduced the tax on diesel, Vietnam is taking emergency steps to increase the supply.
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