IEA Warns of Diesel, Gasoline, and Kerosene Shortages
The IEA's monthly report warns of depleted inventories and high refinery margins that fuel inflation.
English · Original discussion in Spanish · Published
Scarcity of diesel and depleted inventories: The IEA's warning
What if the problem is not crude oil, but the refined products? The International Energy Agency's monthly report contains an unusual warning about refined products: shortages of diesel, gasoline, and kerosene, depleted inventories, and refinery margins so high they feed inflation. Analyst Javier Blas, who has covered this report for years, noted he rarely sees such strong warnings on refined products. The uncomfortable conclusion is that the bottleneck is no longer just at the well, but at the plant converting barrels into fuel for trucks.
What does the IEA report say about diesel?
The warning involves four linked elements. First: scarcity of refined petroleum products. Second: diesel, gasoline, and jet fuel inventories at depleted levels. Third: extremely high refinery margins. Fourth: these margins translate to final prices, fueling inflation.
The focus is on refining, the boring part of the chain that is clogging up. When refining clogs, there is no lack of abstract energy: there is a lack of concrete fuel for trucks, tractors, and planes.
Why is diesel the most fragile product?
The repeating reasoning has two legs. The first is technical: extracted crude is of lower quality, and producing diesel requires nobler crudes, so the available mix does not always cooperate. The second is political: scheduled consumption cuts aim to reserve scarce diesel for strategic uses — the military and freight transport — while pushing private users out.
If this reading is correct, the order of sacrifices is written: first tourism and domestic SUVs, then everything else. The system of welfare and consumption has no more to give, and the volume of the economy will decline. It is not a prediction with a date, but it sets the tone.
The comparison with 1973 no longer fits
The reassuring argument — the oil crisis came, passed, and we are still here — clashes with a demographic fact. In 1970, there were 3.692 billion people in the world; today they are around 8.000 billion. Back then, China, India, or Pakistan barely consumed, and owning a car was a luxury even in entire countries. The author adds a calendar nuance: the crisis started in 1971 and we did not realize it until 1973.
With almost the same resource and much higher demand, the adjustment is made by price or by scarcity. The mild version of the adjustment is the price hike; the unpleasant one is the queue at the pump.
From jerrycans to tractors running on sunflower oil
Practical responses range from reasonable to picturesque. Some accumulated four 20-liter jerrycans and declare themselves ready for a Mad Max scenario. Others change cars out of pure necessity, with a 22-year-old gasoline car giving its last. And some advocate simple iron: low-displacement motorcycles, easy-to-maintain and cheap engines.
At the extreme is domestic autarky: a mule cart that costs more than an electric one, or a small Kubota-type tractor adapted to run on sunflower oil, planting one's own sunflowers and recycling used oil. Scarcity also recycles old commercial arguments: suddenly, consuming local products seems like a fulfilled prophecy.
Who wins when crude oil customers change
The reordering of flows is another major chapter. If a buyer left 10% to Russia and 90% to Saudi Arabia, they can now reverse the proportion: the crude Saudi Arabia releases seeks a buyer, and Russian crude is placed cheaper. The uncomfortable question is not how much it rises, but who becomes the better customer of whom.
In the most geopolitical segment, a scenario proposed by a forum user appears: oil between 75 and 100 dollars and African guerrillas complicating supply, along with quotes about the end of Africa's subordination to former regimes. And some dismiss the issue with "let them come to scoop manure from the chicken coops." Pure energy costumbrismo.
With skyrocketing refining margins and inventory at minimums, the quiet part of the system breaks first. One can debate whether the warning is a diagnosis or a script. What is not debated is how many liters remain in each house's jerrycan.
What if the problem is not crude oil, but the refined products? The International Energy Agency's monthly report contains an unusual warning about refined products: shortages of diesel, gasoline, and kerosene, depleted inventories, and refinery margins so high they feed inflation. Analyst Javier Blas, who has covered this report for years, noted he rarely sees such strong warnings on refined products. The uncomfortable conclusion is that the bottleneck is no longer just at the well, but at the plant converting barrels into fuel for trucks.
What does the IEA report say about diesel?
The warning involves four linked elements. First: scarcity of refined petroleum products. Second: diesel, gasoline, and jet fuel inventories at depleted levels. Third: extremely high refinery margins. Fourth: these margins translate to final prices, fueling inflation.
The focus is on refining, the boring part of the chain that is clogging up. When refining clogs, there is no lack of abstract energy: there is a lack of concrete fuel for trucks, tractors, and planes.
Why is diesel the most fragile product?
The repeating reasoning has two legs. The first is technical: extracted crude is of lower quality, and producing diesel requires nobler crudes, so the available mix does not always cooperate. The second is political: scheduled consumption cuts aim to reserve scarce diesel for strategic uses — the military and freight transport — while pushing private users out.
If this reading is correct, the order of sacrifices is written: first tourism and domestic SUVs, then everything else. The system of welfare and consumption has no more to give, and the volume of the economy will decline. It is not a prediction with a date, but it sets the tone.
The comparison with 1973 no longer fits
The reassuring argument — the oil crisis came, passed, and we are still here — clashes with a demographic fact. In 1970, there were 3.692 billion people in the world; today they are around 8.000 billion. Back then, China, India, or Pakistan barely consumed, and owning a car was a luxury even in entire countries. The author adds a calendar nuance: the crisis started in 1971 and we did not realize it until 1973.
With almost the same resource and much higher demand, the adjustment is made by price or by scarcity. The mild version of the adjustment is the price hike; the unpleasant one is the queue at the pump.
From jerrycans to tractors running on sunflower oil
Practical responses range from reasonable to picturesque. Some accumulated four 20-liter jerrycans and declare themselves ready for a Mad Max scenario. Others change cars out of pure necessity, with a 22-year-old gasoline car giving its last. And some advocate simple iron: low-displacement motorcycles, easy-to-maintain and cheap engines.
At the extreme is domestic autarky: a mule cart that costs more than an electric one, or a small Kubota-type tractor adapted to run on sunflower oil, planting one's own sunflowers and recycling used oil. Scarcity also recycles old commercial arguments: suddenly, consuming local products seems like a fulfilled prophecy.
Who wins when crude oil customers change
The reordering of flows is another major chapter. If a buyer left 10% to Russia and 90% to Saudi Arabia, they can now reverse the proportion: the crude Saudi Arabia releases seeks a buyer, and Russian crude is placed cheaper. The uncomfortable question is not how much it rises, but who becomes the better customer of whom.
In the most geopolitical segment, a scenario proposed by a forum user appears: oil between 75 and 100 dollars and African guerrillas complicating supply, along with quotes about the end of Africa's subordination to former regimes. And some dismiss the issue with "let them come to scoop manure from the chicken coops." Pure energy costumbrismo.
With skyrocketing refining margins and inventory at minimums, the quiet part of the system breaks first. One can debate whether the warning is a diagnosis or a script. What is not debated is how many liters remain in each house's jerrycan.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (237 replies).
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