Publications: Notes at the Margin

The Coming Diesel Disaster (October 5, 2026)

 

The European G7 leaders convinced the 27 members of the European Union to release diesel stocks and hence prevent the United States from banning exports of the fuel. We see this as the equivalent of applying a band-aid where a tourniquet is required. Global diesel supplies are insufficient to meet world demand. Developments in Russia, Ukraine, the Middle East, and China also suggest supplies will shrink rather than return to normal in the coming months, assuming all refineries outside the conflict zones keep producing at current rates. Prices will need to rise significantly, possibly doubling, unless consumption growth is curbed.

 

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