Why the United States Has Diesel Shortages

Do you need this or any other assignment done for you from scratch?

We assure you a quality paper that is 100% free from plagiarism and AI.

You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Click Here To Order Now!

Why the United States Has Diesel Shortages

Table of Contents

Introduction
Discussion
Conclusion
Reference

Introduction

The article entitled Why The U.S. has a diesel shortage dwells into the problems of distillate shortages in the US. The author names four factors that determine diesel shortages in the country. First of all, the demand for fuel is at its highest levels in autumn. Secondly, many diesel refineries undergo maintenance procedures due to which they are unable to produce fuel. Thirdly, several refineries have been recently closed due to which diesel capacity dropped (Rapier, 2022). Finally, the drastic cut in Russian imports due to sanctions hit the diesel market at its hardest.

Discussion

The article rightly names the major reasons for diesel shortages such as the war in Ukraine and peak demand. However, there are some other reasons too that have led to drastic shortages of diesel in the US. For a year and a half of covid restrictions, gasoline consumption has greatly decreased, and when the United States began to open lockdowns, people began to move goods and services, and travel, and this largely impacted the reserves of diesel that leave the refinery. Indeed, the industry has been underfinanced for years and was not ready for the rapid increase in demand. Furthermore, OPEC+ has significantly reduced oil production to support prices even when demand for oil and gasoline recovered faster than expected.

However, measures have been taken to combat diesel shortages and return prices back to normal. To compensate for the lack of diesel, the authorities of Florida, North Carolina, Virginia, and Georgia relaxed environmental requirements for fuel trucks, and Georgia abolished the tax on the sale of gasoline. The White House also temporarily relaxed the age-old Johns Law for one unnamed foreign company owning tankers to allow the delivery of fuel from one American port to another. Though much discussed, the top prices for Russian oil imports have not been set which eases the situation in the global diesel market.

Raising the problems of gasoline shortages, the articles tackle deeper problems of inventory management and sustainability of supplies. Indeed, when the crisis began in the oil industry, operators had to reallocate their budgets. One of the areas in which investments have significantly decreased is geological exploration. This has led to the fact that since the beginning of the fall in oil prices, fewer and fewer new fields have been opened. This shortage of proven reserves proved to have a significant impact on the price of oil in the long term and may yet develop into a supply shortage in 10 years. Had the principle of sustainability been observed, the companies would have kept investment into new oil fields at the same levels since the gasoline industry is not the one where reserves and supplies can be easily restored. Indeed, the industry presupposes year-to-year investment before the fruit of these investments can be reaped.

Another important factor here is the shortage of supplies brought about by Bidens sanctions policy. Indeed, had the principles of supply management been observed, the country would not stop Russian oil supplies without finding a reliable substitute for these exports. As it is, sections hit supplies on several fronts. First of all, supply chains have been broken which led to delays in oil provision to the US. Secondly, the gasoline demand made Biden open up reserves which have been depleted at the highest speed over the last several years. Finally, underfunding and lack of sustainable planning resulted in a lowering of gasoline capacity in many refineries. Thus, due to the violations of principles of supply management and sustainability, diesel supply is unable to meet the demand, which results in shortages and peak prices.

The management course we have undertaken offers several perspectives to resolve the problem of gasoline shortages.

First of all, as Rapier (2022) says some diesel imports are on the way from Europe to the East Coast (para 10). This is an attempt to resolve the issue by establishing new supply chains. While it may just work, I believe it is necessary to establish aggregate planning as well to resolve the problem. Aggregate planning provides for the transformation of annual and quarterly plans into detailed production plans that will determine the volume of produced gasoline for the medium-term period. Thus, companies will see how much they plan to produce and how much they need to invest in geological exploration to live up to their production plans.

Inventory management should also be taken as a priority since the government as of now relies on strategic reserves to cover the deficit. Had the companies had adequate inventory levels, I believe this measure could have been avoided. Inventories could have been filled before the sections against Russia were introduced which would have allowed the companies to provide for peak demand. Moreover, it should be remembered that oil extraction, being an integral part of the gasoline production complex, is a complex industry. To ensure that gasoline is produced at certain levels, the participation of a large number of organizations and enterprises engaged in various technological processes is required.

Conclusion

The basis for the development of the oil and gasoline industry is the preparation of hydrocarbon reserves carried out in the course of geological exploration. The construction of wells is an integral part of a complex of geological prospecting and exploration works, essential for designing development systems. Oil refining, which ensures the production of gasoline, is a link connecting the extractive sphere with the entire mass of consumers in the sectors of the national economy using the finished products produced by it. Transportation and storage of gasoline also require special equipment or facilities. The listed repartitions represent a single interconnected production complex that provides a solution to the tasks assigned to the gasoline industry.

Reference

Rapier, R. ( 2022) Why the U.S. has a diesel shortage. Forbes. Web.

Click Here To Order Now!