Supply Chain Optimization

Why is Diesel so Expensive?

US crude is lighter than, say, Nigerian oil, so it is hard to make diesel in quantity. 
Add to that the issues with crude oil itself, which has gone above $90 only to fall into the $70 range, but recent events have sent it to $85.  These events include:
  • Israeli conflict is a spark in the Middle East's powder keg.  Will Israel bomb Iran?
  • The US Government may take a tougher line with Iran and the oil embargo
  • Crude inventories worldwide are low and falling (Demand exceeds supply—see graph below).
  • Saudi leaders say they will release more oil next year if the US provides security guarantees.
  • Slowing world economies will need less oil.
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In short, there are a lot of factors at work, and oil traders, like the rest of us, are uncertain.