Where were you when you first saw the warning? Can you remember?

“According to the Energy Information Administration,” the fateful tweet began before it switched to all caps, “the US HAS ONLY 25 DAYS OF DIESEL SUPPLY LEFT.”

That was 10 days ago.

So two weeks then…

Two weeks left.

It all sounds pretty apocalyptic.

My Twitter feed is going nuts,  ablaze with what’s barreling down the pike. Images of shortages, riots, fires, and destruction fill the American imagination.

What the Ship?

I turned to a podcast called “What the Ship” by Sal Mercogliano.

Mercogliano is a maritime historian with lots to say on the issues of global shipping, supply chain, and… more recently… diesel shortages. And I figured he’d give a more nuanced take.

The questions with this issue, says Mercogliano, are:

1.] How many days do we normally have?

2.] How much are we producing?

3.] What’s causing this issue?

Starting from the top…

1.] How many days do we normally have?

25 days of supply!

25 days of supply sounds bad. Apocalyptic, even.

“Until,” says Mercogliano, “you look at the numbers. Usually, we’re at about 30. Is it worse than it normally is? Yes.”

But it’s not apocalyptic.

Last year, we were sitting at 30 days of supply. Today, we’re at 25.

Getting more granular, let’s look at supplies…

“Typically for this time,” says Mercogliano, “we are between 120 to 140 million barrels of diesel. We are at 110 million.”

Thing is, production is up…

2.] How much are we producing?

“In terms of production of diesel,” Mercogliano says, “we are above last year's 4.6 million barrels per day; currently producing 5 million barrels of day.”

So we’re producing about 400,000 more barrels per day than last year.

So it begs the question…

3.] What’s causing this issue?

Two things: lack of refineries and… exports.

Mercogliano:

“In New York and New England, we’ve seen the shutdown in massive refinery capacity. We don’t seem to want to talk about the fact that we haven’t built new refineries in this country since really about the 1970s.”

In 1982, we had 301 refineries in the United States.

In 2021, we had 129.

We added 1 in 2022.

So now we’ve got 130.

And as for exports…

Exports are 1.3 million barrels per day, whereas last year’s figure was 0.9 million. Again, that’s about 400,000 extra barrels more this year than last.

Where’s the diesel going? To Europe.

“Due to sanctions against Russia by Europe and other countries, one of the largest sources of diesel is no longer available; meaning the cost for diesel in Europe is going up.”

The market reacts.

“This,” Mercogliano says, “has to do with gas and oil brokers seeing an opportunity to ship oil and gas over to Europe for higher prices than what they’re getting here.”

His conclusion? Yeah, we have problems, but “we’re not running out of diesel fuel.”

(Not yet, at least.)

But, While Everyone is Distracted…

“Crisis survival is all about knowing which crisis is coming in advance,” says our colleague Jim Rickards. “But what about the crises that people don’t see coming? Those can be the most dangerous of all because they’re upon you before you know it.”

The threat that Jim sees -- and that nobody else is talking about -- is a global liquidity crisis worse than 2008 or 1998.

“This threat can do more damage to your net worth and peace of mind than almost any natural disaster,” says Jim. “It’s worth exploring what happened in two cases and what could be coming.”

Let’s begin with ‘98.

In 1998, there was the liquidity crisis that ended with a bang by collapsing the hedge fund Long Term Capital Management (LTCM).

“I had a front-row seat to that crisis,” Jim says. “I negotiated the bailout plan, which involved a $4 billion all-cash rescue by the 14 largest Wall Street banks. We got the deal done over the course of five days (no one slept) with just hours to spare.”

Then, of course, there was the other crisis. You know which one. The crisis that’s still so etched in our psyches all you have to do is utter four syllables:

2008.

“The Financial Crisis of 2008 is still fresh in the memory of investors,” he says. “Market participants recall the sequential failures of Bear Stearns (March 2008), Fannie Mae and Freddie Mac (June 2008), Lehman Bros. (September 2008) and finally the collapse of AIG.”

Thing is, says Jim…

“What many observers of these events don’t know is that the crises actually began over a year before the headlines.”

And only a select few paid attention.

The same goes for this next crisis…

“The Fed is relaxed and does not see it coming,” Jim warned. “Neither does Wall Street. It’s as if we’ve picked up a hurricane on our radar but no one else is looking.”

You might’ve missed Jim’s emergency briefing on Sunday where he dove deeper.

In it, he spoke all about what this crisis could mean for your financial future… and what you can do before it’s too late.

If you couldn’t make it, here’s a link to the rebroadcast.

In it, Jim outlines what to do before the financial “Doomsday Clock” strikes twelve… and why it could happen as early as this Wednesday, Nov. 2 at 2 p.m. EDT.

(Yes, that’s tomorrow.)