A few days late getting to this but because the price of diesel is an input cost into so much of what we consume it is worth a tardy post.
From CNBC. March 30:
- Even before Russia invaded Ukraine, diesel fuel was in short supply due to a drop in global refining capacity.
- Now, with sanctions on Moscow, Russia’s fuel exports to Europe are down and there is a global scramble for supply that has sent prices to record levels.
- “When you’re seeing crude rallying, you’ve seen diesel outpacing it just because of supply concerns. We’re already at eight-year lows for distillate inventories,” one analyst said.
Even before Russia invaded Ukraine, the fuel that runs the global economy was in short supply.
Now some analysts say there could be spot shortages of diesel fuel and prices may stay elevated, even if oil and gasoline decline.
Those higher diesel fuel prices are also stoking inflation.
“I’ve started to use the term diesel ‘crisis.’ It clearly is a crisis that’s happening before our eyes. I wouldn’t rule out lines, shortages or $6 [price] in places beyond California,” said Tom Kloza, head of global energy research at OPIS. “I wouldn’t say it’s a shortage yet. Europe, I think they’re headed for a shortage.”....*****.... That contribution to inflation includes related impacts.“The farmer ploughing the field, getting the food to the store shelf: It’s the cost to FedEx and UPS getting the product we’re buying to the front porch — all of those ancillary knock-on effects,” Zandi said.
But for goods price inflation, for everything from production to shipping, the contribution of diesel prices to inflation is even greater. Zandi calculates that 17% of the acceleration of goods price inflation is due to the higher diesel costs.....
....MUCH MORE
As noted in a 2015 post:
Remember, the rule of thumb is it takes around 10 crude oil calories to produce 1 row crop (mainly corn and soybeans) calorie.
Most other food prices are similarly dependent on their input costs.
One oft-cited bit of nuttines is the fact it takes 127 calories of aviation fuel to get a head of lettuce from California to London....
