How Joe Biden caused the diesel supply crisis he is complaining about

How Joe Biden caused the diesel supply crisis he is complaining about
(AP Photo/Matthew Brown, File)

During recent public appearances, President Joe Biden has continued to complain about energy prices as well as the potentially catastrophic shortage of diesel that has been forecast to hit the United States soon, particularly in the northeast. Of course, he never takes the blame for any of this himself. He instead tries to blame the “greedy” energy companies or, of course, Vladimir Putin. He has called for bans on oil and gas exports and even suggested a mandate that diesel stocks be maintained at a higher level. But a new report from the Institute for Energy Research addresses the actual root of these problems. What we’re facing is a significant loss in refinery capacity in the United States and its various territories. We’ve lost more than a million barrels per day in production capacity, but rather than working to rebuild that capacity, the White House is issuing new edicts that will result in diminishing it further.

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President Biden is complaining about diesel prices and production and his Administration is looking at banning petroleum exports or placing minimum requirements on diesel stocks, which they think will fix the problem. The real problem is that the United States lost one million barrels a day of refinery capacity due to reductions in demand from COVID lockdowns, refinery conversions to biofuels due to lucrative subsidies and onerous environmental regulations.

Emissions rules and general regulations have increased under the Biden administration, raising operating costs and causing some refineries to either shut down or not expand operations. The Biden Administration is doing nothing to fix the real problem. Instead, it is putting new environmental requirements on a refinery in St. Croix that could help the diesel situation in the Northeast.

Banning petroleum exports (which are already at severely low levels) would only cut off markets, making the American oil and gas industry even less profitable, thereby disincentivizing any efforts to expand capacity. And as for an executive order directing a specific amount of diesel to be kept in stock, well… that’s simply insane. You can’t order more diesel to magically appear with a few scribbles of a pen. Someone has to produce the required oil, move it to a refinery, and create the diesel.

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Sadly, as mentioned above, refinery capacity is what we’re lacking. We were already down to the refinery capacity we had in 2016 and now we’ve taken another major hit. As the IER report notes, the EPA shut down the Limetree Bay refinery in St. Croix at the end of last year, bankrupting the former owners. It was sold to West Indies Petroleum and Port Hamilton Refining and Transportation, but a fire at the facility in August of this year interrupted production. But now the EPA is ordering the owners to apply for a new Clean Air Act permit. That will require the installation of hundreds of millions of dollars worth of new monitoring equipment and delay the reopening of the refinery for up to three years.

The St. Croix refinery was previously processing 650,000 barrels of oil per day. It produced huge amounts of diesel fuel that could be making its way to the northeast right now. But the refinery is sitting idle while the EPA works its regulatory magic and we are potentially only weeks away from not having enough diesel to keep the supply chain in operation and homeowners not being able to obtain heating oil or kerosene just as winter is setting in.

Energy prices – including diesel – continue to rise and stockpiles continue to fall. We’re talking about a situation where people could literally wind up freezing to death over the course of the winter. There are steps the federal government could be taking to stave off such an outcome and improve the situation. But thus far, the Biden administration is doing the exact opposite. Some of you may want to start stockpiling blankets at this point. You might wind up needing them.

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Jazz Shaw 10:01 AM on December 02, 2023
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