"Got diesel?" Is the nation running out?

[seafish]

Does anyone know if the supply shortage includes marine diesel?

 

[Scotty B]

Just watched another informative video on diesel shortage from a prominent youtube economist. It had some relevant political commentary in it, but I will not post it to avoid instigating riots.

Aside from the politics of how we got here, the take away is that there is no real easy solution. He suggests the following outcomes are most likely:

1. Significant economic downturn - thereby reducing some demand for diesel allowing supplies and prices to moderate.
2. Real diesel shortages that result in price increases that make everything more expensive that, ultimately results in a major economic downturn and reducing demand and increasing supplies. (His most likely prediction - )
3. A ban on exports.
4. A return of imports from Russia.

He suggest the real heart of the matter is reduced domestic refinery capacity that was lost as a result of demand destruction from the pandemic. Some refiners closed due to lack of demand while everything was shut down. He is not at all hopeful this capacity will ever be restored in the United States due to regulatory constraints.

As prices climb, there will be demand destruction on the margins by RV'ers, marine, and recreational use. But not enough to make up for the inelastic demand from commercial transportation (trucking, shipping, locomotive, and heating) to make a difference.

I am not real hopeful on the immediate future of supply or price stabilizing until something breaks or changes.

 

[Timd32]

A while back Turbo Terry posted something about prices up his way and I was really surprised AK would be so darn expensive for fuel, but it's really unique to be able to refine some of these fuels they are very specific and require the right set up. Takes about an 800 mile trip to refine the AK stuff.

https://www.akbizmag.com/industry/oil-gas/where-does-all-that-oil-go/

That article mentions the throughput which led me down some rabbit holes.....

The throughput for AK for example is lower just from a raw material numbers standpoint. If you pick out other down market years like 2008, 2013 we are well below those numbers. It's been trending down for a long time, there is no flip a switch here, it's been a gradual deal across many political cycles from up that way.

http://www.alyeska-pipe.com/historic-throughput/

On the East Coast throughput is also way down with large chucks of the supply chain going unused. Look at the Colonia Pipe line and capacity on the East Coast they are not at typical levels for sure.

Reuters back in April reported the below... this is now refined product, the above was Crude Oil. There are a few types of refined product. This just blankets it and lumps them all.

In the past four weeks, U.S. exports of refined products have averaged 6.3 million barrels per day, the most in U.S. history. Exports of distillates like diesel have averaged 1.5 million barrels a day, also a record, U.S. Energy Information Administration data showed.

U.S. East Coast distillate inventories fell to 24.7 million barrels in the last week, the lowest since April 1996, the EIA said.

------------------
EIA tracks all of these numbers again its a number game here. What we are using is the ULSD 15ppm or less Sulfur.

It's a lot to go over but production is actually up across the board (except a small dip for West Coast), but exports are also up, and allocated supply is not being introduced into certain areas, I doubt you can get a real unbiased take on where it's all going.


https://www.eia.gov/petroleum/weekly/distillate.php

Here is the snap shot of the storage numbers.

And as we all know too well......

 

[Scotty B]

@Timd32 Great information. Thanks for posting.

I have also read the low sulfur marine fuel mandated (started Jan 1 2020) has also taxed refining capacity.

I think about economics a lot. I can not help but wonder if this becomes a black swan event whereby demand outstrips supply.

I think it will soon come to the point where only well to do individuals or businesses can afford to drive diesel trucks. Same for marine.

I retired last year. My neighbor is retired and said he could only afford to go on two camping trips this year that only required one tank of diesel.

The bright side is that it should not be as crowded or hard to find a camping spot -

 

[bcbender]

The bright side is that it should not be as crowded or hard to find a camping spot -

Wouldn't that be nice....

 

[Tuesdak]

The price of a barrel of oil was this high before without the price at the pump being so high. Boom - Bust Oil economy...

So the not recently bankrupted oil companies are profitable … Let me remind short memory: not long ago the price of oil was negative. A major refinery had an explosion and went bankrupt. 335,000 barrels per day of capacity GONE. Site was remediated to a utopia that’s not making Diesel Fuel. We forget all to easy the Billions the oil companies lost including those that are bankrupt. Not just the name on the fuel pump: the wholesalers, the companies that get the black out of the ground, any independent distributors that were left...

https://www.eia.gov/todayinenergy/detail.php?id=48636

We are being manipulated by kingdom levels of cash for the price of a barrel of oil. Nothing you or I can do about this. This is a Government level Problem. Last people that defied OPEC+, well, they are now under embargo over a war or something. They were the reason OPEC+ didn't have an agreement in place and the price of oil went negative with the reduced demand oddball event of the Covid lockdown.

The energy plan and dealing with oil prices so low that it bankrupts energy suppliers is simply lacking.

It's not the price of a barrel of oil this time that sending our fuel prices through the roof. Again the crude oil prices were this high during The Great Depression V2.0 and the price at the pump wasn't this high.

After the price of a barrel of oil is set the next gatekeeper on price is the refinery. Ya know that’s where the fuel depo gets their stuff from, where the tanker trucks or railroad cars get loaded. The Refinery has the ultimate final say on what the price will be at the pump. Everything past that is shipping.

Shipping minor problem of clogged railroads and lack of pipelines also applies. Government Political football played well by billionaires who say own railroads. They have to be careful that price pain doesn't become "We will fix it" pain of complete lack of supply. Even if it does reach "Fix It! pain levels" there are years of red tape in the way of doing anything.

I had the pleasure of waiting for the refiners to send out the daily prices before the systems I was once in charge of could send out prices to the gas stations.

Today due to short supply of refining capacity we have to outbid say Government School Buses or military battle tanks for Diesel Fuel.

It's long past time Government came up with a long term stable energy policy. Whenever and wherever the wind blows "Green Global Warming Tax" biased on our neglected Electric Utilities because rechargeable batteries plugged into California's shining example ... Wait For It: Power Failure. California is not shining...

We are in some real trouble to the point we can kick back and let other the remaining superpower be the world's police force now. We will leave the arena by the back door involved in a stupid foreign war that drains the rest of our capitol instead of going to our own neglected infrastructure that made The USA a Superpower.

 

[BILLUA]

The x days of diesel remaning means: If no diesel is brewed for the x number of says, we will run out...So, as long the X is greater then 1, we good. And, with millions of semis making America work, we will have diesel.

 

[Tuesdak]

The x days of diesel remaning means: If no diesel is brewed for the x number of says, we will run out...So, as long the X is greater then 1, we good. And, with millions of semis making America work, we will have diesel.

Until a little "cold snap" increases home heating oil demand or a little weather event like a hurricane shuts down or damages refineries.

Without Diesel and now and/or DEF the semis will stop moving. This has, in fact, been a major problem after major hurricanes in some areas of the country: see history.

 

[EDankievitch]

It’s funny.. I know people in the oil business, well they move the oil on ships and barges. The refinery’s on the east coast are running full capacity. But no one talking about how all that fuel is going overseas to Europe to make up what they are not buying from Russia.

 

[seafish]

It’s funny... The refinery’s on the east coast are running full capacity.
But no one talking about how all that fuel is going overseas to Europe to make up what they are not buying from Russia.

This is my understanding of the situation as well.

 

[seafish]

I found the video below to be both succinct and informative ...IMO it is NOT political in nature as it is only examining the underlying economic policies that are the root causes of the current diesel shortage.

 

[Tuesdak]

root causes of the current diesel shortage.

Doesn't go back far enough. Things were NOT working two years ago. "But But But prices were low" you all say: Yeah low enough to bankrupt "BUST" companies who do things with oil. Unprofitable wells shut down again. Unprofitable or damaged refineries shut down and were not repaired.

Then after things are bankrupt and wells shut down: here come the price increases again, but, takes years to recover what we lost if we can. Equipment and people are always short in a BOOM oil cycle. It's expensive to rework an idle well. It's expensive to repair a worn out plant. Even more expensive to meet some new unicorn Government mandated standard "just because".

In 2019, the 335,000 b/cd Philadelphia Energy Solutions (PES) refinery in Philadelphia, Pennsylvania, experienced a major refinery incident. It has not resumed operation since the incident.

Maybe Cummins will come out with a 6.7 Diesel ---> CNG retrofit kit. Seriously the cheapest fuel at the moment is from Fracking

https://afdc.energy.gov/fuels/prices.html

 

[CToney]

Lots of oil north of the 49th parallel. Not much refining capacity. No pipelines either.

You guys worry about highway tractors running out of diesel. What about farm tractors? I can easily burn 150 US Gal of diesel a day in the busy seasons. Its probably in my best interest to buy a larger/more storage.

Its not a a purchase for the faint of heart the new tank and the cost of fuel to fill it…

 

[Tuesdak]

It’s funny.. I know people in the oil business, well they move the oil on ships and barges. The refinery’s on the east coast are running full capacity. But no one talking about how all that fuel is going overseas to Europe to make up what they are not buying from Russia.

Ya mean like the number one, two, and three crude oil producers in The World include The United States?

https://www.eia.gov/energyexplained/oil-and-petroleum-products/where-our-oil-comes-from.php

 

[Scotty B]

More international refinery capacity coming online. This should help ease our export demand.

https://www.argusmedia.com/en/news/...arts-commercial-operations?backToResults=true

And, Al-Zour will be the largest refinery only until the 650,000 b/d Dangote comes online in Nigeria. This is anticipated to happen next year.