The horizon south of the Statue of Liberty is interrupted by the silhouettes of several oil-tank farms. New York harbor is the home of Wall Street and financial wizardry, but it’s also the place where old-school oil traders still buy and sell refined petroleum products the old way, by the gallon, setting benchmark prices. In the 1990s, Morgan Stanley’s Olav Refvik controlled so many of those tank farms that he was known as “the king of New York harbor.” If Refvik was still trading today, he would find his tanks nearly dry: Diesel, the harbor’s most basic fuel, is very scarce.
Last week, East coast inventories of diesel plunged to the lowest seasonal level since government records started more than 30 years ago. The shortage caused a crisis in the diesel market, sending wholesale and retail diesel prices to an all-time high. Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently.