How The Jet Fuel Shortage Is Pushing America's Gas Prices Sky High

The oil industry meanders throughout the world—spanning from the depths of the physical underground to airplanes flying high in the skies above.

With the current fuel price crisis hurting wallets across the nation, there's another fuel crisis happening that's driving prices up at the pump: Jet fuel.

To make up for the lack of jet fuel coming from the Middle East, America’s refineries pivoted to make a lot more of it to sell to global airlines—not out of the goodness of their heart either.

For those less in tune with the way different fuels work, the basic notion is that there are different types of oil that come from different places. Those different oils are good for making different fuels.

The heavy, sour crude that comes from Canada, Venezuela, and the Middle East is great for making diesel and jet fuel. So with oil from the Middle East stuck in the Middle East, refineries on this side of the pond are stepping up.

According to the US Energy Information Administration, American refineries supplied 26,000 more barrels per day in the last week of April than in the weeks preceding. Unfortunately, there isn't actually any spare refining capacity in the United States, so in order to make more of one thing, something else had to get cut.

They decided to cut back on consumer-grade gasoline and diesel. That's when basic economics kicked in, and gasoline prices are up 74 cents since the IEA warned about a jet fuel shortage in mid-April. Retail gas prices also rocketed more than 30 cents a gallon higher over the last week alone, and diesel is 16 cents away from a new all-time high.

Because the oil industry is such a massive spiderweb of intertwined arms and legs, moving one lever always affects the others.

Because of the output pivot, America's fuel reserves are being drawn from, inventory has plummeted by 6.1 million barrels over the last two weeks alone, leaving the warehousing tanks about 2% their five-year average. Diesel is even harder hit, with stockpiles down 11%

The totality of the global fuel outlook isn't good, and with US prices continuing to climb while production continues to struggle, it might be a while before things stabilize.

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