Diesel Shortages Coming to the US, FAST
11-01-2022, 02:41 AM
#1
Gets Weekends Off
Thread Starter
Joined APC: Dec 2010
Posts: 3,090
Diesel Shortages Coming to the US, FAST
I'm honestly shocked more people aren't talking about this as our economy could come to a screeching halt here pretty soon.
https://news.yahoo.com/diesel-fuel-s...000600498.html
Bob Campbell, Odessa American, Texas
Sun, October 30, 2022 at 1:06 AM·4 min readOct. 29—The United States is running short of diesel fuel and the consequences could be grave.
Waco economist Ray Perryman says there are only a few weeks' supply left with the nation's 130 refineries going full blast and the truck fleets, trains, ships, farmers and military potentially facing big challenges.
"Much of our logistics system relies on diesel and if we get to zero inventory, there will be disruptions," Perryman said. "There's not a good way to deal with a shortage.
"We've already seen prices rise dramatically and that will continue as supplies tighten. If things worsen, companies with diesel-powered trucks and trains will start cutting back on routes in response to higher prices and there will be shipping delays and other problems.
"Farm equipment runs on diesel and harvests could be delayed. The food supply from harvest to distributor to grocery store runs on tight timelines and even a few days of disruption in trucking would be felt."
Having recently modeled the effects of trucking and rail on the supply chain, Perryman said, "It's a bad situation, but I don't foresee it reaching a point where a large proportion of diesel-powered vehicles stop running. However, given the fact that the supply chain has already been challenged by the pandemic and its aftermath, any problems due to the diesel shortage are magnified.
"Diesel inventories have been running low for months. In August, for example, distillate inventory was the lowest for that month since 2000. Usually inventories increase through the summer ahead of the harvest and the winter heating seasons, but that hasn't been the case for the past couple of years.
"Worse, the U.S. Energy Information Administration is projecting that the shortages will be around at least through next spring."
Perryman said the result is higher prices for fuels and a concomitant bump in the costs of almost everything else. "There are a variety of reasons for the shortage," he said.
"One factor is the strong increase in demand that occurred as economies reopened after the worst of the pandemic. There have been disruptions such as the Texas freeze in February 2021.
"More recently as many countries decided to stop purchasing petroleum products from Russia, available supplies dropped and there was a scramble for the available supply."
Advanced Power Alliance Texas Vice President Judd Messer said from Austin that the demand for diesel is outpacing supply as the cost to build inventories is rising and the war in Ukraine has introduced market constraints like import bans.
"The need for an expanding, diverse energy economy is evident and Texas is well-positioned to deliver due to an abundance of renewable energy resources like wind and solar, cleaner-burning natural gas and our highly skilled homegrown workforce," said Messer, who is also chief of staff for Republican State Rep. Trent Ashby of Lufkin.
"These assets, coupled with our state's track record of developing innovative energy technologies, enable our state to lead in delivering the cleaner, cheaper energy that the world demands."
The Advanced Power Alliance promotes the development of renewable sources like wind farms and solar projects.
Texas' 32 refineries help produce the 4.02 million barrels per day of diesel fuel that Americans used in October.
The average price of diesel in the U.S. was $3.67 per gallon at this time last year, according to the EIA. Last Wednesday it was $5.34.
Perryman said there's a movement toward cleaner diesel blends, which has long-term benefits but complicates production and raises costs. "The observed price discrepancy reflects higher state and local taxes, but that is a relatively minor factor," he said.
"Stockpiles are dwindling rapidly across the U.S. and some estimates indicate that we only have enough for a few weeks. Refineries are running flat out and have been for some time. A notable stoppage due to overdue maintenance or other problems could cause further disruptions.
"The good news is that additional refinery capacity is coming online over time, though it still won't leave much slack. Refineries take years and billions to build if companies can even get permits and in the current political environment, such investments take on additional risk."
In the wake of aggressive Federal Reserve policies, Perryman said, high prices and short supplies will be ongoing issues unless economic growth slows markedly in the goods-producing sectors.
https://news.yahoo.com/diesel-fuel-s...000600498.html
Bob Campbell, Odessa American, Texas
Sun, October 30, 2022 at 1:06 AM·4 min readOct. 29—The United States is running short of diesel fuel and the consequences could be grave.
Waco economist Ray Perryman says there are only a few weeks' supply left with the nation's 130 refineries going full blast and the truck fleets, trains, ships, farmers and military potentially facing big challenges.
"Much of our logistics system relies on diesel and if we get to zero inventory, there will be disruptions," Perryman said. "There's not a good way to deal with a shortage.
"We've already seen prices rise dramatically and that will continue as supplies tighten. If things worsen, companies with diesel-powered trucks and trains will start cutting back on routes in response to higher prices and there will be shipping delays and other problems.
"Farm equipment runs on diesel and harvests could be delayed. The food supply from harvest to distributor to grocery store runs on tight timelines and even a few days of disruption in trucking would be felt."
Having recently modeled the effects of trucking and rail on the supply chain, Perryman said, "It's a bad situation, but I don't foresee it reaching a point where a large proportion of diesel-powered vehicles stop running. However, given the fact that the supply chain has already been challenged by the pandemic and its aftermath, any problems due to the diesel shortage are magnified.
"Diesel inventories have been running low for months. In August, for example, distillate inventory was the lowest for that month since 2000. Usually inventories increase through the summer ahead of the harvest and the winter heating seasons, but that hasn't been the case for the past couple of years.
"Worse, the U.S. Energy Information Administration is projecting that the shortages will be around at least through next spring."
Perryman said the result is higher prices for fuels and a concomitant bump in the costs of almost everything else. "There are a variety of reasons for the shortage," he said.
"One factor is the strong increase in demand that occurred as economies reopened after the worst of the pandemic. There have been disruptions such as the Texas freeze in February 2021.
"More recently as many countries decided to stop purchasing petroleum products from Russia, available supplies dropped and there was a scramble for the available supply."
Advanced Power Alliance Texas Vice President Judd Messer said from Austin that the demand for diesel is outpacing supply as the cost to build inventories is rising and the war in Ukraine has introduced market constraints like import bans.
"The need for an expanding, diverse energy economy is evident and Texas is well-positioned to deliver due to an abundance of renewable energy resources like wind and solar, cleaner-burning natural gas and our highly skilled homegrown workforce," said Messer, who is also chief of staff for Republican State Rep. Trent Ashby of Lufkin.
"These assets, coupled with our state's track record of developing innovative energy technologies, enable our state to lead in delivering the cleaner, cheaper energy that the world demands."
The Advanced Power Alliance promotes the development of renewable sources like wind farms and solar projects.
Texas' 32 refineries help produce the 4.02 million barrels per day of diesel fuel that Americans used in October.
The average price of diesel in the U.S. was $3.67 per gallon at this time last year, according to the EIA. Last Wednesday it was $5.34.
Perryman said there's a movement toward cleaner diesel blends, which has long-term benefits but complicates production and raises costs. "The observed price discrepancy reflects higher state and local taxes, but that is a relatively minor factor," he said.
"Stockpiles are dwindling rapidly across the U.S. and some estimates indicate that we only have enough for a few weeks. Refineries are running flat out and have been for some time. A notable stoppage due to overdue maintenance or other problems could cause further disruptions.
"The good news is that additional refinery capacity is coming online over time, though it still won't leave much slack. Refineries take years and billions to build if companies can even get permits and in the current political environment, such investments take on additional risk."
In the wake of aggressive Federal Reserve policies, Perryman said, high prices and short supplies will be ongoing issues unless economic growth slows markedly in the goods-producing sectors.
11-01-2022, 02:47 AM
#2
The NeverEnding Story
Joined APC: Sep 2005
Posts: 7,503
The shortage is due in part because the US has been exporting record amounts of diesel fuel this year.
https://www.freightwaves.com/news/us...ng-even-higher
https://www.freightwaves.com/news/us...ng-even-higher
11-01-2022, 04:32 AM
#3
Gets Weekends Off
Joined APC: Aug 2016
Posts: 146
Originally Posted by threeighteen
I'm honestly shocked more people aren't talking about this as our economy could come to a screeching halt here pretty soon.
11-01-2022, 06:20 AM
#4
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,477
Originally Posted by BoilerUP
The shortage is due in part because the US has been exporting record amounts of diesel fuel this year.
https://www.freightwaves.com/news/us...ng-even-higher
https://www.freightwaves.com/news/us...ng-even-higher
EU Willing To Pay Up For Russian Diesel Ahead Of Ban
By Julianne Geiger - Sep 20, 2022, 2:30 PM CDTThe EU may have a plan to ban all Russian diesel purchases in February, but in the meantime, European buyers are happy to pay more for Russian diesel now than they did back in May, industry sources told Reuters.The ban on Russian seaborne diesel imports, set to go into effect as part of a larger strategy to cut off Russia’s revenue stream, follows the EU’s crude oil ban set to go into effect in December. Two months later, the ban on Russian diesel imports—and all its refined products—will go into effect.
The discount on Russian diesel was at $30 per tonne in May, according to Reuters—but it is now just $6 per tonne in northwest Europe and $10 per tonne in the Mediterranean on the back of rising demand.
Europe is on a mission to increase its inventories to a level that will carry them safely through the winter months. And for now, Russia’s discount—although smaller than it was in May—still looks attractive.
“Those that can, will buy Russian and stockpile. Gas-to-oil switching has added to demand and we’re switching to winter diesel. This is one of the factors why Russian stuff is not as cheap as it used to be,” one European trader told Reuters.
But not all European countries are buying Russian diesel. In fact, as a whole, Europe has increased its diesel purchases from non-Russian suppliers in September, according to data from Vortexa.
11-01-2022, 11:33 AM
#5
Banned
Joined APC: Oct 2022
Posts: 14
Originally Posted by fasteddie800
People aren't "talking about it" because it's just another "The Sky Is Falling!!!" non-crisis that'll disappear from your news feed once the next non-crisis is found.
11-01-2022, 06:38 PM
#8
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,477
Originally Posted by SonicFlyer
My understanding is that the refineries are shifting to their winter mix right now which causes a slight flow disruption every year. Reserves get a bit tighter, but probably nothing to worry about.
except for the increased price causing the price of all freight transported by truck and rail, nothing to worry about.
But that only matters if you are a politician trying to explain it to the voters.
https://www.eia.gov/dnav/pet/hist/Le...TE_NUS_DPG&f=W
11-05-2022, 07:58 AM
#9
Gets Weekends Off
Joined APC: Dec 2010
Position: Weekends off
Posts: 398
Originally Posted by BoilerUP
The shortage is due in part because the US has been exporting record amounts of diesel fuel this year.
https://www.freightwaves.com/news/us...ng-even-higher
https://www.freightwaves.com/news/us...ng-even-higher
More profitable to export the refined diesel which constricts domestic availability.... leading to higher prices and higher profits.
Those oil companies sure ain't running a diesel charity.
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