Good news for refiners, bad for travelers: Diesel and jet fuel costs are skyrocketing

Susan Phillips

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Susan Phillips tells stories about the consequences of political decisions on people's every day lives. She has worked as a reporter for WHYY since 2004. Susan's coverage of the 2008 Presidential election resulted in a story on the front page of the New York Times. In 2010 she traveled to Haiti to cover the earthquake. That same year she produced an award-winning series on Pennsylvania's natural gas rush called "The Shale Game." She received a 2013 Alfred I. duPont-Columbia University Journalism Award for her work covering natural gas drilling in Pennsylvania. She has also won several Edward R. Murrow awards for her work with StateImpact. In 2013/14 she spent a year at MIT as a Knight Science Journalism Fellow. She has also been a Metcalf Fellow, an MBL Logan Science Journalism Fellow and reported from Marrakech on the 2016 climate talks as an International Reporting Project Fellow. A graduate of Columbia School of Journalism, she earned her Bachelor's degree in International Relations from George Washington University.

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MIAMI, FLORIDA - DECEMBER 10: An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on December 10, 2021 in Miami, Florida.

May 24, 2022 | 5:28 AM

While gasoline prices in the Philadelphia region continue to climb, jet fuel, diesel, and heating oil charges have skyrocketed even further. Analysts say that’s good news for local refiners, which struggled during the pandemic. But the rest of us could end up paying more for flights and package deliveries.

Tom Kloza, global head of energy analysis at OPIS says when it comes to jet fuel and diesel, he’s never seen such a surge. “These prices are insane,” he said. “It’s incredible. Refiners who really had a miserable 2020 are in clover and ambrosia right now.”

Kloza says refiners are paying about $108 per barrel for crude oil, which they then refine into products like gasoline, diesel, jet fuel, and heating oil. He said diesel is selling for $225 per barrel, and jet fuel is going for $278. “These numbers are epic,” he said.

The airline industry is now facing its highest fuel prices ever. Although air travel has not bounced back to pre-pandemic levels, it has increased steadily, pushing up demand for jet fuel while supplies have not caught up. Add in the war in Ukraine, the ban on Russian imports, and there is a serious fuel supply shortage on the East Coast.

Kloza says the jet fuel shortage has already led to higher air ticket prices — and he expects fares to continue rising.

And while airfares are still below pre-pandemic prices, and remained steady in 2021, fares jumped more than 18% in April, according to the Consumer Price Index released this week. Tickets are 33% higher overall compared to this time last year.

“The Northeast has become untethered from any reality we’ve ever seen with prices,” said Kloza. “We literally almost ran out of jet fuel at a few airports.”

Diesel powers trains, semi-trucks, and delivery trucks — so he says expect a surcharge on package deliveries. In the Philadelphia region, diesel is now above $6 a gallon, almost double the price a year ago, which could help drive up inflation.

The shut down of South Philadelphia’s PES refinery in 2019 after an explosion continues to reverberate and impact local supplies, according to the Energy Information Administration. PES had produced 335,000 barrels of petroleum products a day, including 20% of the East Coast’s pre-pandemic supply of jet fuel, according to the EIA.