Winter hasn’t arrived yet, but the warning signs are already flashing.
Diesel has climbed above $6 a gallon in the United States. Heating-oil customers are being warned to prepare for dramatically higher bills. Fuel shortages and rationing are appearing overseas. Factories are being disrupted. Transportation workers are protesting. Governments are scrambling to subsidize fuel, calm angry populations and keep energy moving.
And all of this is happening before the Northern Hemisphere enters the coldest months of the year.
Americans may look at fuel protests in Syria, shortages in Indonesia or blackouts in Bangladesh and assume this is someone else’s crisis. But energy markets don’t respect national borders. The same global system that is producing shortages and unrest overseas is already pushing American fuel prices into territory that would have seemed extraordinary just months ago.
The question is no longer whether America will feel the global fuel crisis.
$6 Diesel Changes More Than The Price At The Pump
The national average price of diesel reached $6.285 a gallon for the week ending September 14, according to the U.S. Energy Information Administration. Just five weeks earlier, it was $5.257.
That’s especially significant because diesel isn’t simply another fuel Americans purchase.
It is one of the fuels that makes the American economy move.
Diesel powers the trucks hauling groceries to supermarkets, tractors harvesting crops, construction equipment building homes and infrastructure, and countless commercial vehicles moving goods across the country.
CNN recently highlighted the pressure farmers are experiencing during harvest, including one farmer who said filling his combine was approaching $1,000. Higher harvesting and transportation expenses don’t simply disappear. Eventually, businesses have to absorb them, cut expenses elsewhere or pass some portion of them along.
That is how an energy crisis becomes a food-price problem.
A farmer pays more to harvest the corn. The trucker pays more to transport it. The processor pays more to manufacture and package the finished product. Another truck carries it to a distribution center. Another carries it to the supermarket.
Fuel is embedded at virtually every stage.
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And Then Comes Winter
The timing couldn’t be much worse.
CNN reports that Americans who heat their homes with heating oil are projected to spend approximately 31 percent more this winter, with the estimated seasonal cost reaching roughly $2,300. Natural-gas heating costs are projected to increase about 6 percent and electricity around 9 percent.
Heating oil is particularly vulnerable because it comes from the same distillate portion of the petroleum market as diesel. When diesel supplies tighten, the pressure can spill directly into home heating.
Only about 4 percent of American households primarily use heating oil, but those homes are heavily concentrated in New England and the Mid-Atlantic.
For millions of families, therefore, $6 diesel isn’t an abstract trucking statistic.
It could become a winter household-budget crisis.
And we’re still in September.
Overseas, We Can Already See What Happens Next
Around the world, much more severe versions of the same pressures are producing extraordinary scenes.
Syria raised standard diesel prices by approximately 40 percent, helping trigger widespread demonstrations in which protesters blocked roads and burned tires. The backlash became strong enough that the government announced discounted diesel for heating, agriculture and industry.
In Indonesia, motorists in Makassar have encountered enormous lines for subsidized fuel, some stretching more than a kilometer. Authorities have increased supplies and even introduced remote work for some government employees in an effort to ease pressure. Protests have followed.
Bangladesh is facing an even more sobering consequence. Energy shortages have contributed to blackouts and disruptions at garment factories as the country struggles with expensive imported energy.
And Europe is entering winter with another problem: natural-gas storage levels are considerably below their normal seasonal level. Reuters reports European storage at approximately 69 percent full compared with a five-year seasonal average of 85 percent.
