Diesel Demand Collapsing and a Global Oil Repricing Event Could Be Coming.

Added: 2026-05-23

[00:00:00]Okay, so it's been 73 days since Donald Trump first told us the war was over.

[00:00:08]73 days since we were first told that.

[00:00:11]And we have some new data out today. Um, that's a little bit concerning.

[00:00:19]Um, so let's talk about the potential diesel collapse and repricing of the global oil market that may be coming. Um because I need to tell you about this number that no one is talking about, but it tells you a lot about where the American economy may be headed.

[00:00:44]And I kind of hesitate to talk about this honestly because this number does not mean that everything is about to crash.

[00:00:59]But it could mean things could crash. So I want to tell you about this with the understanding that this is simply one sign out of many more that need to come. But it's a bit of a concerning sign. Just a few months ago, American diesel demand was running 260,000 barrels a day above the 5-year average.

[00:01:37]Really, even just last month, the demand for diesel was 260,000 barrels a day above the 5-year average.

[00:01:46]That's a very strong healthy number.

[00:01:51]Understand that diesel demand is um one of the signs you look for concerning the health of the overall economy.

[00:02:01]That kind of number suggests, you know, that you had an economy where trucks are moving, freight is flowing, you know, construction is happening, farms are running, factories are humming along. It's it's just a good it's really a feel-good number, but it's also a good indicator of kind of where things are at. When you have strong diesel demand, even if you have other things lagging in the economy, it's a good sign for the economy. That's what I'm saying. But today, diesel demand is running about 230,000 barrels a day below the 5-year average. So, we went from about 260,000 above to 230,000 below.

[00:02:53]So that's just under a half a million barrel a day drop in demand for diesel. And if you've heard me say it once, I've said it a thousand times. Diesel runs economies.

[00:03:13]Now, there are some things that this could be. People might say, "Well, is it seasonal?" Uh, not really.

[00:03:23]Not not really, but sometimes seasonality can show up in the numbers, right? We just got into spring.

[00:03:36]We just left winter where we use a lot of heating oil and distillates. That counts.

[00:03:44]That counts as diesel.

[00:03:49]But the problem is last month was not brutally cold in the Northeast.

[00:04:02]There there wasn't an an enormous amount of heating oil used in the Northeast last month. What I'm saying is this is not a number that I can find a reason for elsewhere other than maybe it's the economy is stupid. Right? Nearly half a million barrels a day in the wrong direction in a very short period of time. That's, you know, it's not a blip.

[00:04:28]It it's not just some noise. Okay? That is a fundamental signal that something is happening. Now, this doesn't mean the economy is going to collapse, but when we are in the situation we're currently in and we're looking for signs of cracks in the economy, because we know the economy is going to crack eventually the longer this goes on.

[00:04:58]So, this could be a sign of of a crack in the economy.

[00:05:06]Most people don't think about diesel, you know, they think about gasoline, they fill up their car, they watch, you know, prices at the pump, they move on.

[00:05:16]But for a lot of people, diesel feels like someone else's problem, but it's not.

[00:05:24]If you're concerned about the economy, if you're concerned about inflation, you should be somewhat aware of what diesel prices are because it does have an effect on you even though you don't buy diesel because diesel is sort of the bloodstream of the American economy.

[00:05:45]runs the trucks, every long haul rig, every delivery vehicle, you know, UPS trucks, box trucks, you know, everything moving freight, diesel runs, trains, you know, the network that moves coal, grain, lumber, chemicals, all of it.

[00:06:05]It's diesel.

[00:06:08]Diesel. And it also moves our food supply, which is the thing I think about the most. Every bushel of wheat, every ear of corn, every soybean, everything that ends up in our food supply was planted, tended and harvested with diesel and then moved with diesel. Diesel runs construction equipment.

[00:06:35]Every building being built, every road being repaired, every bridge being worked on, diesel. When diesel demand collapses, it means trucks are sitting, rail cars are sitting, it means maybe construction projects are stalling, maybe factories are slowing down, pulling back shipments. There's a lot of things.

[00:07:03]And I'm going to be honest with you, a couple of experts that I know are very concerned about this number. I'm not there yet, but I'm typically not an alarmist. And I'm not saying they are, but when you're looking for something to be wrong, you tend to find it. And sometimes you overemphasize the importance of it.

[00:07:28]There are certainly times where diesel demand has fallen and it not led to a recession.

[00:07:36]So, we can't look at this one thing and say, "Oh, we're going to have a recession." like some people are doing.

[00:07:43]Uh we just need to see more data. We need to see more stuff.

[00:07:52]Now the other thing that is being predicted right now is a little bit sort of I've already talked about this some I didn't I didn't call it a global repricing but that's what it is because at the same time that diesel demand is falling like it is which does you know suggest economic weakness the second story that goes with that is in the global oil market and it's a story that is being called the great oil repricing event. It's been called this in the past. So, this is this isn't a new term.

[00:08:37]But let's unpack what that means. For several months now, financial oil markets have been suppressed.

[00:08:45]Straight of hormones is closed. We have market manipulation. You have market exhaustion. And you have traders stepping aside. Actually prices are not reflecting the physical real world reality because of all the market manipulation. Brent crude has been jumping all over the place, but it hasn't been pricing in the actual severity of what's happening on the ground. What's happening on the ground?

[00:09:15]Well, as I said, the straight of form is closed.

[00:09:19]We've lost a lot of oil. We've now lost over a billion barrels of oil. And what we're doing is is we're borrowing future oil.

[00:09:30]Think of the oil losses we have now is like running up charges on a credit card because that's basically what we're doing. We're burying against future oil.

[00:09:43]Strategic reserves in Asia are at critical levels. Our gasoline inventories are far below the 5-year average. They're now far below where they were in 2022 heading into summer when gas hit $5 a gallon. California still sitting on that six week buffer.

[00:10:03]We have refineries popping off about once a week, couple of times a week.

[00:10:08]Middle Eastern oil infrastructure, you know, it's been damaged by a lot of strikes. The physical market is screaming right now and the financial market is sort of pretending not to hear it.

[00:10:24]But the gap between the physical reality of what's happening in financial pricing is something that cannot persist. You remember when I told you guys about paper markets and physical markets and how the prices between the two were so far apart and how it was never seen it that far apart when physical oil was $150 a barrel and and oil on the paper market was 110.

[00:10:54]And I told you like those two numbers have to come back together. There's nothing that can keep them apart. Well, they did come back together.

[00:11:03]They came back together a couple of weeks ago and they're now well, they got closer to each other, but now they're kind of spreading apart again.

[00:11:13]This is sort of the same thing except this is where paper oil or the price of oil you see when you Google oil on your phone. When you Google the price of oil, the this global repricing event is where the paper market will follow the physical market however high it goes. We saw this during COVID when oil went negative. That was a global repricing event. In 2022, when oil skyrocketed, that was a global repricing event. A repricing event resets the baseline price of oil.

[00:11:57]What the average is going to be for a long period of time.

[00:12:02]And in this particular repricing event, it will say that the new normal is going to be higher permanently or for long enough.

[00:12:16]It's at minimum, we're talking years, right?

[00:12:21]at least until all of the structural conditions that cause the repricing to fundamentally change which in this case would require the straight of H for H for H for H for H for H for H for H for H for H formoose to reopen the Middle East you know the war in Iran to end all the damaged infrastructure to be completely rebuilt all global strategic reserves to be fully replenished we're not planning on putting oil back in our SPR until the end of the Trump administration.

[00:12:57]And we don't know how long other countries around the world are going to take to refill theirs.

[00:13:05]But basically, this global repricing event means that oil prices will remain higher until every single thing is brought back to where it was a week or so before the war started.

[00:13:24]And none of that happens quickly. This this takes years, right? So when you put these two things together, collapsing diesel demand on one side and a pending oil repricing event on the other.

[00:13:42]What does all that produce? That produces stagflation.

[00:13:46]That's the term that economists use for basically the worst of all possible worlds. I guess an economy that is weakening with fewer jobs, less activity, declining fuel demand combined with prices that are rising. That's stagflation. Normally those two things move in opposite directions. When the economy weakens and demand drops and prices fall, that's a natural cycle. That's how things are supposed to work, right? And a recession brings cheaper stuff.

[00:14:32]But stagflation breaks that cycle. You get weakness in the economy and inflation at the same time.

[00:14:42]You have a shrinking economy and everything getting more expensive at the same time. Wages don't keep up. Savings can be wiped out.

[00:14:55]People on fixed incomes, like retired people, they can really get hammered.

[00:15:03]Working families, they get hit really hard. Their income shrinks while their cost of living explodes.

[00:15:13]This is what we saw in the 70s.

[00:15:17]It's called the malaise era. If you haven't heard that term, years of economic pain that fundamentally reshaped literally American politics.

[00:15:33]This this is this is not good stuff.

[00:15:36]We're setting up a version of that right now if we're not careful. Diesel demand is telling us that there may be something happening with the economy potentially starting to contract a little bit.

[00:15:52]Let's hope it doesn't mean that, but we know the economy is about to take a hit.

[00:15:58]So, it's really hard not to pay attention to that. And then you have oil markets pointing to this repricing event.

[00:16:08]which several of the world's top commodity experts are believing is is about to happen in a matter of you know 3 or 4 weeks.

[00:16:24]And then we have this political environment where it seems like neither party is really wanting to admit how bad this could be.

[00:16:39]And the consumer is sitting in in the middle of all this.

[00:16:44]Now, Democrats are hammering Trump for high gas prices and but they're not really telling people how bad this economy could be. I think they're waiting a little longer.

[00:17:01]And and then the Republicans, they're hanging their head on the stock market.

[00:17:04]Well, the stock market's not the economy.

[00:17:07]It never has been. And I've said that before. I'll say it until I can't say it anymore. The stock market is a wealth measurement for like the top 10% of people in the country.

[00:17:23]The diesel demand number is an activity measurement for everyone.

[00:17:30]Right now, those two indicators are telling really different stories.

[00:17:35]You should trust the diesel number, not the stock market number. Because trucks don't lie, trains don't lie.

[00:17:43]Construction equipment don't lie. They run when there's work to do. and they sit when there isn't.

[00:17:57]So, a lot of people believe that this repricing event is coming. I've been saying for quite a while that prices were going to be high for a long time. A repricing event is even longer than what I was saying.

[00:18:12]And if this diesel number is because if it's because of a contracting economy, then the weakness is already there.

[00:18:22]And the bill for both of these things is going to land on our kitchen tables.

[00:18:29]That's that's where the bill always lands. I don't know if y'all noticed that, but we always get stuck with the bill.

[00:18:37]So what we're seeing right now is the early stages of this setup for something much bigger.

[00:18:51]And if this global repricing event occurs, it will mean high oil prices for years.

[00:19:05]years now. What does high oil prices mean?

[00:19:10]Well, that depends on how far the repricing curve bends, but I would say $85 and up for a very long time.

[00:19:29]You could even say you could just say above $80 a barrel for years. Now, some people might think that's not too bad. That's that's not good.

[00:19:44]We don't look at short-term oil price spikes. A lot of people focus on a number for one day.

[00:19:53]Often we hear people say, "Well, gas prices haven't gotten as high as they did under Joe Biden because it, you know, it hit $5."

[00:20:07]That that $5 mark was extremely brief.

[00:20:11]Oil prices hit $120. That was very brief. The number that is important is the average number over a period of months and years.

[00:20:24]It's not the one week or the few days that oil hit $120.

[00:20:33]It's the year of oil over $90 that is much more significant than the few days of oil at $120.

[00:20:45]That is much much more significant. But we always focus on the highs and the lows.

[00:20:55]Don't worry about the highs and the lows. Those are short-term events. What matters is the years.

[00:21:05]Gas prices under the Biden administration eclipsed $4 a gallon on a national average. I believe it was $178.

[00:21:17]I don't know why that number's in my head, but I believe it was like it might have been 180, but it was right around there. It was how many days, you know, it was over $4. And I think those I think that was broken up into actually two separate events.

[00:21:39]Now, people often talk about how gas hit $5 a gallon.

[00:21:45]The pain wasn't the $5 a gallon. The pain was the $4 a gallon for 180 days.

[00:21:54]Gas being $5 a gallon for a few days.

[00:22:00]Not a huge deal. Over four for 180 days, that's half a year. That's a big deal, right? And this is what we're talking about with this global repricing event.

[00:22:10]Long-term higher prices.

[00:22:13]long-term higher prices. That's what we're talking about.

[00:22:18]Folks, if you haven't had a chance, uh please check out uh the new American Power podcast just dropped. It's on Apple, Spotify, anywhere you can download your podcast. It's also available on Find Out Media's YouTube page if you want to watch it. Um other than that, let me know your thoughts in the comments section. Really appreciate all my followers and subscribers. I hope you guys have a great week. Thanks.