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And you thought filling up your gas tank was expensive.
Refineries around the world are struggling to produce enough fuels like diesel and heating oil, making inventories uncharacteristically low — and prices undesirably high — for this time of year, Bloomberg reported.
Last week, oil futures in London were at nearly $95 a barrel, but in the States, diesel prices soared above $140, the highest ever for this time of year, Bloomberg said.
Much of the price jump can be attributed to OPEC+ nations Saudi Arabia and Russia announcing earlier this month they would extend their crude oil production cuts to at least the end of the year. That’s 1.3 million fewer barrels of crude oil every day:
In addition to Saudi Arabia and Russia’s cuts, intense heat waves in the Northern Hemisphere this summer caused many plants to run at a slower pace, and the pandemic saw less-efficient refineries across the globe shutter as demand slowed.
The cuts are putting pressure on industries like aviation, trucking, and shipping — sectors that rely on jet fuel, diesel, and heavy fuel oil.
The Buck Doesn’t Stop There: Of course, the increased costs for moving ships, planes, and trucks aren’t just swallowed whole by suppliers, making the fight against global inflation even tougher. “Diesel is the fuel of the 18-wheeler truck that moves products from factory to market, so when prices spike, those higher transportation costs get passed on to businesses and consumers,” Clay Seigle of Rapidan Energy Group told Bloomberg.
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