Why are jet fuel prices so high?

Figure 1.  This jet fuel price index provides the latest price data from the leading energy information provider Platts.^[1]

Jet fuel can actually be used in cars, but only in diesel engines. Kerosene jet fuel (including Jet A and Jet A-1, JP-5, and JP-8) and diesel are actually similar enough to allow for cross-functionality and would provide a similar performance. Although, experts wouldn't recommend running a jet on diesel.

Why are jet fuel prices so high?

Just as the crude supply shrinks, demand for fuels refined from it is growing. The worldwide return to airline travel has driven up demand for jet-A, but the booming freight and shipping markets are clamoring for diesel fuel. Limited supply means both industries are paying more for fuel.

What is considered a distillate?

Distillate is a term used to refer both to the atmospheric gasoil cut from atmospheric distillation, and to a range of light products ranging from kerosene to diesel.

Generally, the distillate products are considered to include:

• Kerosene
• Jet fuel
• Diesel
• Heating oil
• Industrial gasoil (IGO)
• Marine gasoil (MGO) 

Can any country be energy-independent?

Tracy (𝒞𝒽𝒾 ) on Twitter has shared her thought on this topic:

No country is ever going to be actually energy-independent. There are global oil flows depending on where your refinery is located and what you produce. What many do not understand is that API matters.

The US produces mainly light sweet crude, realistically this can only produce gasoline from this barrel. What happens when you need heavier distillates like jet fuel?

 

References

1. Jet Fuel Price Monitor
2. What You Need to Know About Aviation Fuel Prices
3. Distillate
4. UBS’s Billionaire Clients Are Betting on Big Gains From Energy
• Almost half of the super-rich clients the bank surveyed said energy was attractive for future investment returns and business, the most among 21 categories overall, according to a report published on 12/08/2022. About a third of the 50 billionaires polled also viewed biotechnology, pharmaceuticals and software as attractive areas, the Zurich-based firm said. 
5. Why Oil's Multi-Month Slump Is Coming To An End
• For oil, improving liquidity conditions are the game changer. Oil is a risk asset. While it must eventually adhere to the laws of supply and demand, in the medium term (3-6 months) it is typically more influenced by liquidity, specifically excess liquidity (defined as the difference between money growth and economic growth).