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Top Truck Stop Love's Is 'Monitoring' Diesel Supplies Amid Shortage Fears

By Dan Molinski

 

One of the U.S.'s largest truck stops, Love's, said Wednesday it is closely watching its diesel fuel supplies in the Northeast amid growing concerns of industry-wide shortages, but said it has no plans to limit purchases.

"Love's is monitoring the fluid situation on the East Coast, we have experienced minimal outages during low traffic hours," Oklahoma-based Love's Travel Stops said in an emailed statement. "The company has no plans to restrict purchases of diesel."

Inventories of diesel fuel, which in the U.S. is mostly used by truckers, have been on the decline since the pandemic began, but those declines have accelerated since the start of this year. Analysts attribute the declines to reduced refining capacity, robust demand for the trucker fuel during the pandemic, and a recent rise in diesel exports.

Earlier on Wednesday, the U.S. government's Energy Information Administration said total inventories of distillates, which is mainly diesel fuel but also heating oil, fell last week to a 17-year low of 104 million barrels, which is 23% below normal.

On the East Coast, the situation is even worse. The EIA said distillate fuel oil inventories in the so-called PADD 1 district that covers the Northeastern states fell by 1.1 million barrels last week to just 21 million barrels, the lowest ever recorded in data going back to 1990.

Love's truck stops, with some 550 locations across 41 states, also seemed to confirm reports on social media Wednesday that said Love's and other truck stops such as Pilot were informing their fleet operators that shortages of diesel fuel on the East Coast may happen in the coming week at some stores.

"The Love's Fleet Sales Team proactively alerted the company's fleet customer base to maintain their consistent, straight forward approach to evolving market fluctuations," it said in response to the social media posts. "Love's is committed to keeping our customers well-informed of market developments ahead of the trends to help mitigate impact to their business."

Representatives from Pilot truck stops weren't immediately available for comment.

The falling inventories of diesel could cause prices for the fuel to keep eclipsing record highs. AAA said the average price for a gallon of diesel fuel in the U.S. hit another all-time high on Wednesday, at $5.55 compared to $3.13 a year ago. Gasoline prices also hit an all-time high Wednesday, at $4.40 a gallon versus $2.99 a year ago.

Another reason for the drop in U.S. diesel fuel inventories is that exports of the fuel have risen sharply in recent months despite the low stockpiles. For the week ending April 8, U.S. distillates exports hit a four-year high 1.7 million barrels a day, according to the EIA.

Some analysts have speculated that the rising exports are being sent to Europe following Russia's invasion of Ukraine.

But Matt Smith, lead oil analyst at commodity tanker-tracking firm Kpler, said that doesn't appear to be the case.

"The drop in distillate inventories is because of lower refining over the pandemic (due to lower gasoline demand) while distillate demand held up much better (given trucking of goods, Amazon, online shopping, etc)," Mr. Smith said. "Middle distillate exports are also playing a small part, returning to pre-pandemic levels -- but that's not a pull to Europe, it's to LatAm, their leading destination."

U.S. refinery runs now are at 15.7 million barrels a day compared to the 2015-19 average of 16.4 million, Mr. Smith said. "Refiners have just not been producing as much and have not rebounded to pre-pandemic levels."

 

Write to Dan Molinski at dan.molinski@wsj.com

 

(END) Dow Jones Newswires

May 11, 2022 20:07 ET (00:07 GMT)

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