النص الكامل لحلقة Here's Why Expensive Diesel is Wreaking Economic Havoc

Speaker 1: It's about a million. 00:03:20 Speaker 2: Barrels a day of supplies that have been completely lost to the global market because this fuel either isn't getting produced Or if it is, it's not getting on to global markets. So what we've seen in Russia is that Russian oil refineries have become targets for Ukrainian attacks, just as Ukrainian energy infrastructure has become targets of Russian attacks. And that has led to a disruption in the supply of diesel fuel out of Russian refineries. Obviously, Moscow wants to keep the fuels that it has. at home because it wants it both for military use and for trucking and farming within Russia. So it has instigated an export ban on diesel. So that means that diesel fuel that previously came from Russia now isn't reaching the world market. In the Middle East, we've got many more refineries that have been either targeted by Iran, or they are in a situation where they're unable to get the product that they were making out to the international market. So there again, we've lost the supply of diesel fuel to the market at a time when Stocks at the start of these wars weren't particularly high. Much of the industry sort of runs on a just-in-time basis. So we didn't have huge stockpiles. I mean, we've had some, and those have certainly helped. But we've seen these disruptions to supply. And we're now moving into a period where diesel demand from harvests in certainly harvests in Australia, harvests in Latin America. We're probably coming to the end of harvests in much of Europe and North America. But we're moving now into a period where diesel in some parts of the world, at least, will be used as a heating fuel. 00:05:28 Speaker 4: And for all these different parts of the economy that use diesel, is there any alternative if supplies get tight in the way that they have? 00:05:36 Speaker 1: Not really. 00:05:37 Speaker 2: And this is part of the problem that we have a large fleet of trucks or a large fleet of agricultural equipment that runs on diesel. Those engines don't really run on much else, certainly not in the sort of quantities we're looking at. You can do some tweaking in refineries to produce a bit more diesel, but that comes at the expense typically of how much jet fuel you can use or you can produce. So you're giving with one hand and taking with the other, a really difficult situation to manage. 00:06:16 Speaker 4: What about the efforts that are being made on an international level to try and alleviate this crisis? Will the G7' s move to release reserves do much to help? 00:06:25 Speaker 2: It will potentially do something in the short term. 00:06:30 Speaker 1: There are two problems here. 00:06:32 Speaker 2: One is that, yes, you can release stockpiles, and that's what strategic stockpiles are there for, to be used in times of shortage. 00:06:40 Speaker 1: But once they're used, they've gone. They have to be replenished. 00:06:44 Speaker 2: So if this persists, we just have a problem that rolls on and on. And each time you release stocks, the amount that you've got left– to deal with any future shortage is depleted. The second problem is that if you've got this supply shortage, in the long term, the only way you can meet that if you can't increase the supply is to reduce demand. Now, one of the most effective ways of reducing demand is through higher prices. If you start releasing stockpiles to bring prices down, you send a message to the market that says prices are coming down, everything's OK. And so those people who have the flexibility to use or not use diesel go back into the market. And that can, in time, make the situation even worse. 00:07:37 Speaker 4: Are there other steps that could be taken, though, that might help to alleviate this crisis and bring prices down? 00:07:44 Speaker 2: Certainly one of the things that Donald Trump has done is to allow road users, so people either with diesel pickup trucks or diesel trucks. to use fuel that previously had been set aside for farmers. This is so-called red diesel. It's dyed red to distinguish it. It's taxed at a lower level. And so allowing that to be used by everybody could be bring down that tax element of prices. Certainly, one of the things that could help at the pump would be temporary reductions in taxes on fuel. They're very high across Europe. They're lower, but they're not zero in the US. So that could help to bring down prices. But you have that same problem that the price signal isn't there. The other thing that's been looked at and there's been a lot of talk about a U.S. diesel export ban. The idea behind that would be that if you keep the diesel at home in the U.S., that brings down prices at least slightly. 00:08:47 Speaker 1: In theory, for U.S. users. 00:08:50 Speaker 2: It has completely the opposite effect, of course, everywhere else in the world that relies on exports from the U.S. We already saw when that was really being talked about that diesel prices came down a bit in the U.S. but went up a lot in Europe, and that would persist. But many people have made the argument that The U.S. isn't a fully integrated market. It's difficult to move products around in the U.S. because the refineries in the south along the Gulf Coast aren't well connected with some of the key consumption areas, particularly on the West Coast or in the northern states. And so what you would have is you would have a surplus of diesel building up on those Gulf states. That would start to depress prices in some parts of the U.S., but not other parts. And the response to that would be as those tanks fill up in places like Texas and Louisiana. So those refiners would start to cut back on processing. That means they'd be producing not just less diesel, but less of everything else as well. And that would send prices up in the US, not down. And so we've seen some backing away from that as the G7 has looked at another release of strategic stockpiles elsewhere. 00:10:15 Speaker 4: So the supply constraints are fairly severe. The options to add more to the market or to ease them seem fairly limited. How bad could this get, given that we have prices at these close to record high levels in many parts of the world for the global economy? 00:10:34 Speaker 2: Well, I think the longer that diesel prices stay elevated, the more of an impact they're going to have on inflation, not immediately, but certainly into next year. We're likely to see food price inflation. We're likely to see more broad inflation on goods and services that rely on diesel fuel. The solution, of course, is to resolve the conflicts that are keeping diesel off the market. The capacity exists. worldwide to produce the diesel we need. The problem is that there's a significant proportion of that capacity at the moment that isn't able to produce the diesel we want and to get it to market. 00:11:28 Speaker 4: Okay, well, plenty to watch on this front. Gillian Lee, our oil strategist, thank you very much. For more explanations like this from our team of 3,000 journalists and analysts around the world, go to bloomberg.com slash explainers. I'm Stephen Carroll. This is Here's Why. I'll be back next week with more. Thanks for listening.