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Diesel Shortage Coming Soon

As the world was ready to usher in a new category of vehicles that would be running on electricity leading to lower emissions and a better environment. There came a rude wake-up call that such a dream is miles away and is removing the focus from the need of today which is a fossil fuel.

Today the underinvestment of the past several years has finally come to bite us. Sanctions have officially made it difficult for Russian oil and crude products to be delivered to the countries in need.

This has resulted in two scenarios, one is occurring in Europe where diesel which is the blood of commercial goods is either limited in supply or the price is too high. The second is occurring in India, where diesel price has an under-recovery of almost INR 25/liter making it unviable for refineries to sell it to their retail outlets.

In many years of crisis in the past never there was a scene like this. Where running trucks would become unviable despite having sufficient demand.

But these factors have led many small truck operators to sell their fleet and join large operators on a contractual basis, especially in the USA. The worrying part is that in recent months the demand for truck operators has reduced by 15-20% making cash flow generation further difficult.

The issue at hand has many sides to it and will take a good amount of time to resolve as the governments will not be providing any cash flow relief that would go against them in fighting inflation. This would result in many of the operators shutting the business sooner than later making the recovery at a later point more worrying.


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