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Domestic supplies of gasoline and diesel in the United States are dwindling as record volumes of fuel are being exported from the Gulf Coast, BNN Bloomberg reports.
Citing Vortexa tracking data, Bloomberg said that up to 2.09 million bpd of gasoline, diesel, and jet fuel shipped out of the Gulf Coast last month. That rate represents the highest volume since 2016 based on known data.
And it wasn’t destined to help Europe out of its energy crisis. Instead, the report says that most exports went to Latin America, and that is not expected to slow in the near term.
Bloomberg says that countries in South America will burn diesel fuel at a high rate as the winter season sets in, while Mexico is scooping up large volumes of gasoline from the U.S.
This situation is expected to lead to demand destruction overseas, first, resulting in domestic consumers being able to “outcompete” foreign buyers, Bloomberg cited Houston-based Lipow Oil Associates LLC as saying.
At the same time, it’s diesel that is raking in the profits for American oil refineries focusing on increased output due to wild margins that will only calm down once gasoline output fails to meet domestic summer driving demand, according to Bloomberg.
Diesel prices, which hit a record $5.16 per gallon last week and have remained on average $1 per gallon higher than gasoline prices, are largely being blamed for the higher prices Americans are paying for consumer goods, which primarily need to be shipped by a trucking industry that relies on diesel.
On Monday, diesel prices rose further to $5.321 per gallon, according to AAA.
In a Monday report, Citi noted that the increase in diesel prices had resulted in a decline in the freight industry’s free cash flow from 21% in March to 19% in April.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,