By Dan Molinski


Two of the U.S.'s largest truck stop chains, Love's and Pilot, said Thursday they are closely watching low diesel fuel supplies in the Northeast amid growing concerns of industry-wide shortages, but said they have no plans to restrict purchases.

"Most markets in the eastern U.S. remain extremely low on diesel inventory levels," Brad Jenkins, senior vice president of supply and distribution for Tennessee-based Pilot Co., said, noting that some areas of the Midwest are also seeing tight supplies amid refinery issues. "All other markets are currently adequately supplied. We are also undertaking contingency planning to continue to have a steady source of diesel fuel."

Pilot has over 750 Pilot Flying J travel centers in 44 states and five Canadian provinces. The truck stops have 6,200 diesel lanes, 5,300 showers and 790 restaurants.

On Wednesday night, Oklahoma-based Love's Travel Stops, with 550 locations across 41 states, issued a similar statement.

"Love's is monitoring the fluid situation on the East Coast, we have experienced minimal outages during low traffic hours," Love's said. "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.

The U.S. government's Energy Information Administration said Wednesday 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 last week, which is 23% below normal.

On the East Coast, the situation is worse. The EIA said distillate fuel oil inventories in the Northeastern states fell by 1.1 million barrels last week to 21 million barrels, the lowest recorded in data going back to 1990.

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 Thursday, at $5.56 compared to $3.14 a year ago. Gasoline prices also hit an all-time high Thursday at $4.42 a gallon versus $3.01 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

05-12-22 0919ET