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In my entire lifetime, global supplies of diesel fuel have never been tighter than they are right now. And that is really bad news, because the entire economy of the western world runs on diesel. If we suddenly had no more diesel fuel, virtually all of our trains, trucks and ships would stop running. Needless to say, just about everything that stocks our store shelves comes to us via trains, trucks and ships. So the fact that there is not enough diesel fuel to go around is a really big deal. Supplies have been declining for months, and at this point diesel inventories have fallen so low that we only have a 25 day buffer remaining…

The U.S. is facing a diesel crunch just as demand is surging ahead of winter — with only 25 days of supply left, according to the Energy Information Administration.

National Economic Council Director Brian Deese told Bloomberg TV that diesel inventories are “unacceptably low” and “all options are on the table” to bolster supply and reduce prices.

Unfortunately, this is not just a problem here in the United States.

Globally, supplies of diesel fuel have fallen to the lowest level that we have seen since 1982…

“The demand for diesel tends to rise as you get close to the winter, because the molecule that makes up diesel is very similar to the molecule that you use for heating homes in the U.S., for winter fuels in Europe,” Tom Kloza, dean of U.S. oil analysts at Oil Price Information Service (OPIS), told Newsweek.

The issue is global, said Kloza, adding that diesel inventories around the world are the lowest as they’ve been since 1982, “and we’ve added about 3.4 billion people in that time.”

Read that last line again.

…click on the above link to read the rest…

Fuel company issues diesel shortage warning, says conditions ‘rapidly devolving’

October 31, 2022

Fuel company issues diesel shortage warning, says conditions ‘rapidly devolving’

A major fuel supply and logistics company is raising a red flag on upcoming diesel foul shortages.

Mansfield Energy issued the alert Friday stating there was a developing diesel fuel shortage in the southeastern region of the United States. The company speculated that the shortage could be generated from “poor pipeline shipping economies” and a historically low supply of diesel reserves.

“Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast,” the company said. “These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges.”

Diesel and heating oil inventories are down for the Northeast from Maine to Maryland. iStock© iStock

States expected to experience serious affects of the shortage include Maryland, Virginia, Alabama, Georgia, Tennessee, North Carolina and South Carolina.

The Biden administration says it is keeping a close watch on diesel inventories and working to boost supplies following news that reserves have been depleted and could run out in less than a month if not replenished, sparking fears of shortages and rising prices.

President Biden announces his administration’s plans to eliminate junk fees for consumers, Oct. 26, 2022, in the South Court Auditorium on the White House campus in Washington. AP Photo/Patrick Semansky, file© AP Photo/Patrick Semansky, file

The Energy Information Administration (EIA) reported this week that, as of Oct. 14, the U.S. had only 25 days of reserve diesel supply, a low not seen since 2008. National Economic Council Director Brian Deese acknowledged to Bloomberg that the level is “unacceptably low,” and “all options are on the table” to address the situation.

…click on the above link to read the rest…

East Coast retail diesel prices moving significantly higher than overall US hikes

October 29, 2022

East Coast retail diesel prices moving significantly higher than overall US hikes

Extremely tight inventories are seen as the driving factor blowing out spreads with benchmark Gulf Coast market

East Coast diesel prices are racing ahead of the rest of the country. Photo: Jim Allen/FreightWaves

East Coast retail diesel prices are soaring relative to the rest of the country, propelled by inventories in the region that are almost half of what they normally should be at this time of year.

Retail prices recorded in the DTS data series in SONAR tell the story of how much diesel has surged. On Sept. 16, retail diesel in Allentown, Pennsylvania, a major logistics center, was $5.116 a gallon, while the Houston price was $4.513 a gallon, a spread of just over 60 cents. On Oct. 15, Allentown was $5.663 a gallon while Houston was $4.70, a 96.3 cent gap. By Thursday, Allentown was at $6.028 a gallon and Houston was $4.70 a gallon, a spread of $1.328 a gallon.

***The green line represents the DTS.HOU price for average retail diesel prices in Houston. The blue shaded area is the DTS data for Allentown.***

The East Coast price blowout has been propelled largely by the tight inventory situation in what is known as PADD 1, the Department of Energy’s designation for that region.

Weekly statistical data reported by the EIA this week had PADD 1 inventories of ultra low sulfur diesel at 21.3 million barrels for the week ended Oct. 21, a more than 7% decline in just one week. But more striking was the fact that those inventories are 56.5% of the five-year average for the corresponding October weeks, excluding the pandemic-influenced data from 2020.

By contrast, national inventories for all distillates, which are not broken down by specific grades, are running about 80-81% of the five-year average, and that is considered extremely tight by analysts.

…click on the above link to read the rest…

Major Fuel Supplier On “Code Red” As Diesel Crisis Hits Southeast

October 26, 2022

Major Fuel Supplier On “Code Red” As Diesel Crisis Hits Southeast

Diesel supplies are very scarce across the Northeast and in the Southeast. Supplies are at the lowest seasonal level for this time of year, and the US only has 25 days left of the industrial fuel in storage. The crisis gripping the diesel market appears to be getting out of hand as one fuel supply logistics company initiated emergency protocols this week.

“Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility. Mansfield is also moving the Southeast to Code Red, requesting 72-hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels,” Mansfield Energy wrote in an update to customers on Tuesday. The trucking firm has a fleet of tankers that delivers refined fuel products to more than 8,000 customers nationwide.

Mansfield said in many areas on the East Coast, diesel fuel prices are “30-80 cents higher than the posted market average, because supply is tight.”

“At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity,” the notice continued.

This could mean that the US diesel market is so tight that supplies are running very low in certain areas. The crisis has sent supplies of the industrial fuel that power the economy, from trucks to vans to generators to freight trains to tractors, to the lowest level ever for this time of year.

The latest EIA data shows there are only 25 days of diesel supply, the lowest since 2008; and while inventories are record low, the four-week rolling average of distillates supplied – a proxy for demand – rose to its highest seasonal level since 2007.

Mansfield’s is a warning sign that the record low storage levels is beginning to impact fuel supply networks.

…click on the above link to read the rest…

Farm grade diesel shortage could threaten new crops

October 25, 2022

Farm grade diesel shortage could threaten new crops

DOVER, Fla. — A tax-free diesel fuel shortage for farmers in Central Florida is threatening crops and could send prices for agriculture commodities skyrocketing by early next year.

Farmers are reporting a shortage of diesel fuel from suppliers at the port, which is leading them to fuel up at local pumps in competition with the general public, and paying full price per gallon of fuel.

What You Need To Know

- Diesel fuel shortage for farmers in Central Florida could threaten crops

- Farmers are reporting a shortage of diesel fuel from suppliers at the port

Diesel fuel is heavily used by farmers to help power water pump houses to water crops

“Every time our fuel supplier goes to the port they are being told that the allocations aren’t there for them,” said Matt Parke with Parkesdale Farms in Dover. “So we are really having to go to different gas stations to get regular road diesel out here.”

Diesel fuel is heavily used by farmers to help power water pump houses that get water onto newly planted crops.

Without diesel fuel, Parke says new crops could be at risk.

“If they run short and we are in the middle of trying to live these plants in, you know, they are going to die,” said Parke. “And we will have 50 to 80 percent loss.”

Standing next to a bagged diesel pump, Bennett Station owner Darwish Elhajji says he’s seeing the struggle over the fuel shortage daily.

Bennett Station is a bulk supplier for the kind tax-free diesel farmers in Plant City use for everything from water pump houses to tractors and other field equipment.

“Any negative effect to the crop in this city will affect everyone, it will be a trickle down,” Elahjji said.

…click on the above link to read the rest…

Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left

October 20, 2022

Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left

For all the drama surrounding Biden’s latest Strategic Petroleum Reserve fiasco and his admin’s ridiculous idea to “stimulate” US energy producers to pump more oil because, you see, Biden promises to buy oil at some unknown point in the future (he may or may not, but right now he is certainly draining a million barrels of emergency US energy lifeblood just to buy a few midterm votes, assuring energy producers have zero incentive to produce more), the real crisis is not oil or gas, but diesel.

The problem is that as we repeatedly warned over the summer, even as others were transfixed by the moves in gas, see:

… the crisis gripping the US diesel market is getting out of hand, as demand is surging while supplies remain at the lowest seasonal level for this time of year ever, according to government data released Wednesday.

According to the EIA, the US now has just 25 days of diesel supply, the lowest since 2008; and while inventories are record low, the four-week rolling average of distillates supplied – a proxy for demand – rose to its highest seasonal level since 2007.

…click on the above link to read the rest…

Sorry! Diesel prices are likely to climb again soon

August 4, 2022

Sorry! Diesel prices are likely to climb again soon

Behind the scenes of why fuel is so expensive in 2022

Truck stops made record diesel profits this quarter. (Roger V. Solis/AP)

For today’s MODES, I called up FreightWaves Editor-at-Large John Kingston to find out what the heck is happening with diesel prices recently. I learned a lot, but the most important takeaway was the World Oil Market Waterbed Theory.

This conversation was lightly edited and condensed for clarity.

FREIGHTWAVES: Just to start off pretty broad, the macro conditions are pretty much the same from what we saw earlier this year to what’s happening now. Obviously, we haven’t built any new refineries in the past few months. There’s still a war in Ukraine. Why is it that future prices are going down, and maybe not as quickly, but retail gasoline and diesel prices are also going down?

KINGSTON: “It’s a good question because it’s not really clear. I think part of the reason is that the news reports continue to trickle out about Russia doing relatively well in finding new buyers for its crude oil. Whereas, the International Energy Agency had predicted a couple of months ago that the loss of Russian supplies was going to be about 3 million barrels a day, which is roughly about 3% of the world market — which is a lot when you lose that much supply.

“I’m going to date myself with this reference, but it’s the best I can do. The world oil market is like a waterbed. If you push down one corner of the waterbed, the water moves throughout the entire mattress. If Russia is actually finding buyers for its oil that maybe had gone to Europe previously, but the oil is instead going to India or China, it’s the same as it getting out to its normal places…

…click on the above link to read the rest of the article…

German Oil Refiner Observes “Run” On Diesel & Heating Oil, Halts Deliveries

August 4, 2022

German Oil Refiner Observes “Run” On Diesel & Heating Oil, Halts Deliveries

The latest sign Europe’s energy problems are worsening is that Austrian oil and gas firm OMV AG halted crude product deliveries from storage facilities in Germany amid a “run” on supplies, Bloomberg reported.

OMV Germany said two storage facilities in the southern part of the country “are observing a current run on heating oil and … this is possibly due to crisis-driven market shortages and thus excessive speculation and stockpiling.”

“In order to secure supplies in the short and medium term, loading will now be temporarily suspended until the Burghausen refinery has resumed production,” OMV said in an emailed response, adding Burghausen and Feldkirchen’s storage facilities will restart deliveries on Aug. 15.

A combination of issues has led to diesel and heating oil in southern Germany, Austria, and Switzerland.

First is the energy disruption due to Western sanctions on Russia.
Second OMV’s Burghausen refinery maintenance.
And third, falling water levels on the Rhine River have reduced deliveries of crude product shipments from the North Sea.

The panic hoarding of diesel and heating fuel likely comes from utilities who have had to switch the type of power generation from natural gas to other crude products due to capacity constraints on the Nord Stream 1.

German power prices have soared to a new record of more than 400 euros per megawatt-hour on the European Energy Exchange on Thursday on the prospects of a worsening energy crisis.

With Brent crude prices tumbling below $100 a barrel, it appears the paper oil market is out of touch with the tightness reality of physical markets.

Truckers warn skyrocketing diesel prices are making US supply-chain and trucking industry unsustainable

June 11, 2022

Truckers warn skyrocketing diesel prices are making US supply-chain and trucking industry unsustainable

Truck passes sign at Flying J Truck Stop in Pearl, Miss., Wednesday, April 20, 2022. — Truck passes sign at Flying J Truck Stop in Pearl, Miss., in April. The trucking industry offsets diesel prices through a fuel surcharge, which is calculated through a base rate that is usually added to a shipper’s freight bill.AP Photo/Rogelio V. Solis

Truckers are sounding the alarm on skyrocketing diesel prices.
A trucking company owner went viral after warning prices could cause major supply-chain issues.
Truckers told Insider they’ve had to take loads at a loss and are considering leaving the industry.

A Facebook post from the owner of a Texas trucking company went viral last week after he warned that skyrocketing diesel prices could have longterm consequences for the US supply-chain.

Austin Smith, owner of Iron River Express, said it has cost him over $20,000 a week to keep his three trucks running.

“If something drastic doesn’t change in the next few weeks/months, I promise you, you’ll see empty shelves everywhere you look,” Smith wrote in a post that was shared nearly 290,000 times. “You’ll see chaos as people fight for the basic necessities of everyday life.”

Smith did not respond to a request for comment from Insider in time for publication.

Insider spoke with five truckers who warned that the industry could be at a breaking point. The drivers say they’ve had to get creative in recent months as they work to turn a profit while spending thousands at the pump.

Richard Resek, a trucker based out of ports in New York and New Jersey, told Insider he’s turning off his truck and rolling down his window instead of using air conditioning during long summer nights. He also plots out gas stations with the cheapest fuel prices.

…click on the above link to read the rest of the article…

Brent crude rises above $120 a barrel as UK fuel prices hit record highs

May 31, 2022

Brent crude rises above $120 a barrel as UK fuel prices hit record highs

Price increases on global oil markets and at UK forecourts add to concerns about rising inflation and its impact

Car being refuelled — Diesel prices in the UK hit a record 182.7p a litre on Saturday, taking the cost of filling up a 55-litre diesel car above £100 for the first time. Photograph: salarko/Alamy

The global oil price has risen above $120 (£94.90) a barrel as record high petrol and diesel prices in the UK add to concerns about the inflationary pressure that families and businesses are facing.

Brent crude, the international benchmark, rose on Monday to $120 a barrel for the first time since late March, lifted by the easing of Covid-19 restrictions in Shanghai and Beijing, a move that could lead to higher demand for energy from China.

The possibility of a European ban on Russian oil imports also pushed up crude prices. European leaders have met to discuss next package of EU sanctions against Russia over its invasion of Ukraine.

Analysts said rising oil prices could stir further inflation fears as the world economy absorbed the impact of the war. A sustained rise may also fuel higher profits for energy firms, coming after the UK government announced a £5bn windfall tax on North Sea oil and gas producers to help fund financial support for households struggling with the cost of living.

Jeffrey Halley, a senior analyst at the financial trading firm OANDA, said: “Markets pricing in peak virus in Beijing and Shanghai are behind the rally in oil prices today, with a China reopening likely leading to increased oil consumption.

…click on the above link to read the rest of the article…

Now We Are Being Told To Expect Food And Diesel Shortages For The Foreseeable Future

May 16, 2022

Now We Are Being Told To Expect Food And Diesel Shortages For The Foreseeable Future

If you think that the food and diesel shortages are bad now, then you will be absolutely horrified by what the globe is experiencing by the end of the year. All over the planet, food production is being crippled by an unprecedented confluence of factors. The war in Ukraine, extremely bizarre weather patterns, nightmarish plagues and a historic fertilizer crisis have combined to create a “perfect storm” that isn’t going away any time soon. As a result, the food that won’t be grown in 2022 will become an extremely severe global problem by the end of this calendar year. Global wheat prices have already risen by more than 40 percent since the start of 2022, but this is just the beginning. Meanwhile, we are facing unthinkable diesel fuel shortages in the United States this summer, and as you will see below there are “no plans” to increase refining capacity in this country for the foreseeable future.

If you had told me six months ago that we would be dealing with the worst baby formula shortage in U.S. history in the middle of 2022, I am not sure that I would have believed you.

But that is precisely what we are now facing. One young couple in Florida searched stores in their area for four hours and couldn’t find anything…

When Erik and Kelly Schmidt, both 35, went into a Central Florida Target store this week to buy their usual baby formula, Up & Up Gentle, for their five-month-old twins, they found an empty shelf.

The pair then embarked on a half-day journey in search of formula, any formula, and their quest didn’t end there. “We spent over four hours going to every Target, different Walmarts, different grocery stores, just finding absolutely nothing,” Erik Schmidt said.

…click on the above link to read the rest of the article…

Gasoline & Diesel Prices Spike to New WTF Records, But Don’t Blame Crude Oil

May 13, 2022

Gasoline & Diesel Prices Spike to New WTF Records, But Don’t Blame Crude Oil

Predictions a few weeks ago of peak gasoline prices have been obviated by the inflationary mindset.

The average price of all grades of gasoline at the pump spiked to a record $4.33 per gallon on Monday, May 9, the third week in a row of increases, and was up 46% from a year ago, edging past the prior record of Monday, March 14 ($4.32), according to the US Energy Department’s EIA late Monday, based on its surveys of gas stations conducted during the day.

Gasoline price increases slap consumers directly in the face every time they get gas, and the classic ways of hiding price increases – such as making gallons smaller (shrinkflation) – would be illegal.

Adjusted for CPI inflation, it’s still not a record. In July 2008, gasoline at $4.11 would amount to $5.37 a gallon in today’s dollars. Long way to go, baby.

Back then, demand destruction rippling out of the Financial Crisis and the Great Recession toppled the price spike. We’re not there yet either – but the Fed has started to work on it.

Gasoline futures have been breath-takingly volatile since February, with huge spikes and drops, that led to a new record on Friday, but on Monday, they fell from that record (chart via Investing.com):

The average retail price of No. 2 highway diesel spiked to a record $5.62 a gallon at the pump on Monday, the EIA reported late Monday. Year-over-year, the price of diesel has spiked by 76%!

Adjusted for CPI inflation, that spike in diesel prices is still not a record. In July 2008, diesel peaked at $4.76 a gallon, which would be $6.22 in today’s dollars. Long way to go, baby.

…click on the above link to read the rest of the article…

“Diesel To Be Rationed On East Coast This Summer,” Warns US Oil Billionaire

May 13, 2022

“Diesel To Be Rationed On East Coast This Summer,” Warns US Oil Billionaire

Billionaire refinery and fuel station owner John Catsimatidis warned that the East Coast might experience diesel shortages this summer as inventories hit multi-decade lows and refining capacity slumps.

“I wouldn’t be surprised to see diesel being rationed on the East Coast this summer.

“Right now, inventories are low, and we may see a shortage in coming months,” Catsimatidis, CEO of United Refining Co., told Bloomberg.

Catsimatidis’ warning comes as East Coast diesel inventories have fallen to the lowest levels since 1990. National stocks are around a two-decade low.

Tight fuel supplies are due to many factors. Two major ones are declining refinery capacity on the East Coast and increased fuel shipments to Europe.

Diesel prices have risen for the past 17 days and hit a new record of $5.557 a gallon on Thursday, according to American Automobile Association. Gas prices are also at a new record of $4.418.

The billionaire’s warning follows a report from logistics firm FreightWaves of “3 very large trucking fleets” preparing for diesel pumps at fuel stations to run dry across the Mid-Atlantic and Northeast regions this summer.

Founder and CEO of FreightWaves Craig Fuller tweeted a few pictures of notifications from fleet operators, warning their drivers about “imminent” diesel shortages.

The East Coast diesel shortage situation appears dire as now an oil/gas billionaire has confirmed what trucking fleets are warning about.

Major Trucking Firms Prepare For “Imminent Diesel Shortage In Eastern Half Of US”

May 11, 2022

Major Trucking Firms Prepare For “Imminent Diesel Shortage In Eastern Half Of US”

Major trucking fleets across the eastern half of the US are preparing for an “imminent” diesel shortage, according to logistics firm FreightWaves.

Founder and CEO of FreightWaves Craig Fuller said “3 very large fleets” are preparing for diesel pumps at fuel stations to run dry. Drivers of these fleets received notifications about fuel shortages that could materialize in the coming weeks across the Mid-Atlantic and Northeast regions.

Fuller tweeted several messages that drivers received from fleet operators. The notifications were alarming.

He also tweeted what appears to be an unnamed industry insider explaining the historic mess hitting Mid-Atlantic and Northeast markets is a combination of crude being diverted from the US to Europe and supply chains issues along the East Coast.

Diesel supply is short worldwide due to the invasion of Ukraine disrupting energy markets and resulting Western sanctions. The writing has been on the wall for months about developing shortages, as we discussed in:

On Wednesday, DOE showed US diesel inventories are now 23% below the five-year average for this time of year, at their lowest since May 2005.

The situation isn’t improving as diesel prices at the pump soar to new highs.

Retail gas prices are also legging higher.

And who does President Biden blame this time for possible fuel shortages? Can’t keep blaming Putin for every problem.

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