Former CIA analyst Larry Johnson chose to reprint in full an article by energy investor Carl Miller entitled “Global Diesel Breakdown.” Miller’s thesis is that, with reserves of diesel at the lowest level ever and prices climbing, there is no longer a safety cushion “capable of absorbing another major outage, export restriction, or shipping disruption.” He says within the next month this scarcity could transmit directly into “regional availability, freight costs, food prices, agricultural production, industrial output, and inflation.”
The U.S. is entering harvest and heating season with less diesel in storage than at any comparable point on record. Distillate inventoriesfell to 103.4 million barrels in the week ending Aug. 21, the lowest seasonal level since the series began, after running roughly 12 percent below the five-year average all summer. This is the window in which the country is supposed to be building stocks ahead of winter.
Price is no longer just telling drivers to conserve. EIA put the national average at $5.454 a gallon on Aug. 17, up 19.7 cents in a week and nearly 47 percent above the same week in 2025; it has since held above $5.60. The refining margin matters more: the diesel crack spread has passed $100 a barrel for the first time, against a normal $20 to $30—the market bidding for barrels that do not exist, even with U.S. refiners at near-full utilization and exports still pulling product out of domestic tanks.
What has been lost so far is slack. Diesel remains in the system, but not enough surplus to absorb the next outage or closed lane without something else going short, and the spare capacity that would normally cover it is gone too: global refinery throughput averaged 80.9 million barrels a day in July, down about 5 million from a year earlier.
U.S. Diesel reserve is at 28 days, down from 37 days in February. This matters because shipping times can take weeks to months, leaving a potential gap in supply with potential for severe disruption of economic activity.
