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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.

Widespread US Diesel Shortages Send Crack Spreads To Mindblowing Highs

May 11, 2022

Widespread US Diesel Shortages Send Crack Spreads To Mindblowing Highs

Global stocks of refined petroleum products have fallen to critically low levels as refineries prove unable to keep up with surging demand especially for the diesel-like fuels used in manufacturing and freight transportation. The result has been a surge in prices refiners receive for selling fuels compared with prices they pay for buying crude and other feedstocks, boosting their profitability significantly.

In the United States, refiners currently receive roughly an average of more than $150 per barrel from the sale of gasoline and diesel at wholesale prices, while paying only around $100 to purchase crude.

The indicative 3-2-1 margin of $50 per barrel is based on the assumption a refinery produces two barrels of gasoline and one barrel of diesel from refining three barrels of crude.

The margin is meant to be representative for an “average” refinery and is a gross figure out of which refiners have to pay for labor, electricity, gas, hydrogen, catalysts, pipeline transport and the cost of capital.

Net margins are narrower and refinery costs have been rising rapidly as result of widespread inflation ripping through the economy following the coronavirus pandemic. Nonetheless, even allowing for rising input costs, gross margins have more than doubled from $20 at the end of 2021, ensuring refiners have a strong financial incentive to maximize crude processing and fuel production.

DISTILLATE FOCUS

Gross margins are currently higher for making diesel (almost $60 per barrel) than for gasoline ($45 per barrel) reflecting the relative shortage of middle distillates.

U.S. distillate fuel oil stocks are 31 million barrels (23%) below the pre-pandemic five-year average compared with a deficit of only 6 million barrels (3%) in gasoline.

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

U.S. East Coast Diesel Supply Is Running on Fumes

May 5, 2022

U.S. East Coast Diesel Supply Is Running on Fumes

Last week, East coast inventories of diesel plunged to the lowest seasonal level since government records started more than 30 years ago. The shortage caused a crisis in the diesel market, sending wholesale and retail diesel prices to an all-time high. Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently.

Diesel is the workhorse of the global economy. It’s used everywhere to keep trucks, tractors, freight trains and factories moving. And its ubiquity means the increase in its price will exacerbate global inflationary pressures.From central bank interest rates to supermarket prices, a lot hinges on diesel. On Tuesday, average U.S. retail diesel prices posted the fifth-consecutive fresh daily record, surging above $5.3 per gallon, up nearly 75% from a year ago. The price spike is worse on the Eastern seaboard, where diesel retails now for more than $6 per gallon, nearly double 2021’s price.The oil tanks in New York harbor are nearly empty for reasons both global and local. Around the world, diesel is in short supply as demand has surged well above pre-Covid levels, spurred by a boom in freight…

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

SHTF! You HAVE TO HEAR What This TRUCKING INSIDER said to ME! PREP NOW!

May 4, 2022

SHTF! You HAVE TO HEAR What This TRUCKING INSIDER said to ME! PREP NOW!

Why every American should care that diesel prices are surging across the country

May 3, 2022

Why every American should care that diesel prices are surging across the country

A blue tractor-trailer travels on a highway as dollar bills are seen to the right to illustrate diesel prices. — The cost of diesel fuel impacts truckers and the entire economy. (Photo: JIm Allen/FreightWaves)

Gasoline prices are increasing almost daily, pinching the wallets and pocketbooks of nearly all Americans with cars. However, as bad as that news is, diesel prices are surging even more across the country. Today’s truckstop retail diesel prices hit a new record of $5.32/gallon. Since February 1st, national truckstop diesel prices have increased by $1.57/gallon. For an owner-operator whose truck gets 6.5 miles per gallon, this equates to a cost increase of $0.24 per mile.

A graph showing the price of diesel per gallon.

Diesel’s importance to our economy

To many Americans (including politicians), diesel prices are so removed from their version of reality that they often dismiss the importance of diesel to the U.S. and global economies. However, diesel is the fuel that drives the economy and leaves major industries vulnerable to cost shocks.

Without diesel fuel, the U.S. economy would collapse in a matter of days. Our supply chains would completely shrivel, almost overnight.

Trucks use it to haul our goods across the country. Of all Class 8 trucks (the big ones), 97% use diesel. No, Elon Musk is not going to save us here. When Tesla announced the Semi in 2017, Musk projected that over 100,000 would be produced by 2022. Today there are less than 20, mostly prototypes.

Trains also depend on diesel to transport products across the country. Almost every train in the country depends on diesel for energy.

An orange BNSF train hauls coal — *A BNSF train hauls coal. (Photo: Flickr/Aaron Hockley)*

Even a large portion of our electricity is indirectly powered by diesel. Over one-fifth (22%) of our electricity in the United States comes from coal. Diesel-powered trains transport coal to power plants across the nation.

Diesel is also critical to our imports and exports, because 80% of the ships that transport products via the ocean are powered by diesel.

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

Diesel In ‘Crisis’ Mode As Prices Break Records

May 1, 2022

Diesel In ‘Crisis’ Mode As Prices Break Records

Diesel prices, the lifeblood of industry, have hit a record $5.16 per gallon, trending $1 per gallon higher than gasoline prices, with inventory shortages adding severe pressure and resulting in inflated prices for consumer goods.

“While gasoline prices get much of the attention, diesel, which broadly is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel and jet fuel, have plummeted to their lowest level in years,” media quoted Patrick De Haan, head of petroleum analysis at GasBuddy, as saying.

AAA records diesel at $5.18 per gallon as of early Friday.

De Haan warned that if U.S. distillate inventories fall much further–by five million barrels–they will be lower than at any point in the last two decades.

In the first half of March, diesel and gasoline prices began to soar to record highs as a result of Russia’s invasion of Ukraine and subsequent sanctions, coupled with post-pandemic economic recovery that has led to a continual uptick in demand.

Loss of refining capacity will make the diesel crisis the most painful for the U.S. Northeast, and there is no indication of a reprieve in the near future, with GasBuddy predicting that diesel prices will remain high and continue to outpace gasoline prices.

Record-high diesel prices continue to drive up the cost of consumer goods, which all have to be transported by a trucking industry powered by diesel engines.

There is now concern that a ripple effect could see U.S. diesel prices topping $6 per gallon as Russia cuts off natural gas supplies to Poland and Bulgaria. That could potentially force Europe to shift to other fuels, such as diesel, to fill in gaps.

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

NATO Sanctions and the Coming Global Diesel Fuel Disaster

April 16, 2022

NATO Sanctions and the Coming Global Diesel Fuel Disaster

Amid the ongoing global inflation crisis, NATO heads of state and mainstream media repeat a mantra that high energy prices are a direct result of Putin’s actions in Ukraine since end of February. The reality is that it is the western sanctions that are responsible. Those sanctions including cutting SWIFT interbank access for key Russian banks and some of the most severe sanctions ever imposed, are hardly having an impact on the military actions in Ukraine. What many overlook is the fact that they are increasingly impacting the economies of the West, especially the EU and USA. A closer look at the state of the global supply of diesel fuel is alarming. But Western sanctions planners at the US Treasury and the EU know fully well what they are doing. And it bodes ill for the world economy.

While most of us rarely think about diesel fuel as anything other than a pollutant, in fact it is essential to the entire world economy in a way few energy sources are. The director general of Fuels Europe, part of the European Petroleum Refiners Association, stated recently, “… there is a clear link between diesel and GDP, because almost everything that goes into and out of a factory goes using diesel.”

At the end of the first week of Russia’s military action in Ukraine, with no sanctions yet specific to Russia’s diesel fuel exports, the European diesel price was already at athirty-year high. It had nothing to do with war. It had to do with the draconian global covid lockdowns since March 2020 and the simultaneous dis-investment by Wall Street and global financial firms in oil and gas companies, so-called Green Agenda or ESG…

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

Rationing Looms As Diesel Crisis Goes Global

March 28, 2022

Rationing Looms As Diesel Crisis Goes Global

Russian refiners cut processing rates of diesel fuel.
Already tight diesel supply is getting even tighter.
Vitol’s chief executive Hardy: diesel supply shortage could trigger rationing in Europe

Earlier this week, Vitol’s chief Russell Hardy warned that a diesel shortage could trigger fuel rationing in Europe. Now, those warnings are multiplying, with fuel rationing no longer looking like an abstract idea. Europe is risking a blow to its economic growth, Reuters reported on Thursday, citing experts. Diesel is what freight transport uses to deliver goods to consumers, but it is also what industrial transport uses for fuel. With Russian refiners cutting their processing rates in the wake of several waves of Western sanctions, already tight diesel supply is going to get a lot tighter.

“Governments have a very clear understanding that there is a clear link between diesel and GDP, because almost everything that goes into and out of a factory goes using diesel,” the director general of Fuels Europe, part of the European Petroleum Refiners Association, told Reuters this week.

As Vitol’s Russell Hardy noted earlier this week, “Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East. That systemic shortfall of diesel is there.”

Europe is not the only one feeling the diesel pinch, however. Middle distillate stocks are on a decline in the United States, too, Reuters’ John Kemp wrote in his latest column.

Distillate inventories, according to EIA data, have booked weekly declines for 52 of the last 79 weeks, Kemp reported, falling to 112 million barrels last week. The total decline for the last 79 weeks amounts to 67 million barrels. Last week’s inventory level was the lowest since 2014 and 20 percent lower than the five-year average from before the pandemic.

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

“Gas Stations Will Run Dry”: Catastrophic Scenario For Diesel Emerging According To World’s Biggest Energy Traders

March 22, 2022

“Gas Stations Will Run Dry”: Catastrophic Scenario For Diesel Emerging According To World’s Biggest Energy Traders

While the world has been obsessively focused on crude oil and gasoline in recent weeks, we instead alerted readers to a far more dire scenario playing out in diesel, a source of energy which is absolutely critical in keeping the “just in time” world running on time.

As a reminder, here are some of the articles we have published on the topic in recent weeks, many even before the Ukraine war:

Diesel Is The U.S. Economy’s Inflation Canary – Feb 8
U.S. Diesel Stocks Set To Fall Critically Low – Feb 18
China Asks State-Owned Refiners To Halt Gasoline, Diesel Exports – Mar 10
Global Diesel Shortage Raises Risk Of Even Greater Oil Price Spike – Mar 12

Fast-forward to today, when our warning was echoed by the heads of one of the largest commodity trading houses and the biggest independent oil trader who were speaking at the FT Commodities Global Summit in Lausanne, Switzerland on Tuesday.

The corporate leaders estimated that as much as 3 million barrels of oil and its products a day could be lost from Russia as a result of sanctions, in line with previous estimates, and warned that global markets face a squeeze on diesel with Europe most at risk of a “systemic” shortage that could lead to fuel rationing.

“The thing that everybody’s concerned about will be diesel supplies. Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East,” said Russell Hardy, chief of Switzerland-based oil trader Vitol. “That systemic shortfall of diesel is there.”

Those imports mean that Russian supplies account for about 15% of Europe’s diesel consumption, according to the FT which carried their comments.

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

Why liquefied coal (CTL) and natural gas (GTL) can’t replace oil

March 21, 2022

Why liquefied coal (CTL) and natural gas (GTL) can’t replace oil

Preface. Here are just a few of the reasons why we aren’t likely to convert enough coal to diesel to matter as oil decines (see Chapter 11 Liquefied Coal: There Goes the Neighborhood, the Water, and the Air for more details on this in When Trucks Stop Running: Energy and the Future of Transportation)

It is not likely much coal will be converted to diesel, because if all global coal production were converted to liquid coal, perhaps 17 million barrels a day (Mb/d) could be produced. That amounts to 22 % of current world oil production. If more efficient liquefaction technologies came along, and coal now used to generate electricity and make cement, steel, aluminum, paper, and chemicals were all diverted to make liquid fuels, as much as 54 Mb/d could be made. But roughly 17 Mb/d is more likely because diverting most or all of the coal from other uses to make CTL is not realistic. After all, we do need cement and steel to build the CTL coal liquefaction plants, roads, and the trucks and pipelines to transport the CTL itself.

In the U.S. coal production could be doubled to make CTL, but that might cut reserve life in half. In the U.S., there may be 63 years of reserves at current rates of production, but only 31.5 years if we doubled coal production.

The thermal efficiency of liquefaction is roughly 50–60 %; hence, only half the coal energy used in liquefaction will come out as the energy available in the CTL fuel. And there may be other losses. An inconvenient truth about coal is that it is a dirty fuel. If carbon capture and sequestration were to be required, 40 % of the remaining energy in a liquid coal power plant would be consumed.

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

China Rations Diesel Amid Nationwide Fuel Shortages

November 2, 2021

China Rations Diesel Amid Nationwide Fuel Shortages

China Rationing Diesel

October 30, 2021

China Rationing Diesel

China has begun to ration fuel amid the ongoing energy crisis. As reported by the BBC, trucks in China may only fill their tanks with 100 liters (10% capacity) of diesel, with other areas reportedly only allowing 25 liters. The city of Fuyang is limiting purchases and charging drivers a surcharge of up to 300 yuan to fill up their tanks. The fuel shortage will affect both domestic and international goods as trucks simply cannot drive to their destinations. Despite surging demand, all fossil fuels are in tight supply and have seen drastic upticks in price. Jeremy Stevens, Chief China Economist at Standard Bank, told the BBC from Beijing that companies have already begun using diesel generators to maintain factory operations. World leaders are urging this instant switch to renewable energy and net-zero emissions, but the technology does not currently exist to power the world. The energy crisis will contribute to supply shortages worldwide.

Australia’s diesel imports on record high Update June 2021

October 10, 2021

Australia’s diesel imports on record high Update June 2021

Australia’s monthly diesel imports reached a record of 2,360 ML (495 kb/d) in June 2021. While it is common for imports to vary from month to month there is a long term increasing trend. This is caused by diesel consumption on a continuing growth path while Australian refineries are shutting down.

Fig 1: Diesel imports timeline – by country

We see that under the increasing trend there are other structural changes taking place. Imports from Japan went down.

Fig 2: Diesel imports from Japan dropped by 75%

Japan’s refining capacity and throughput is on a long-term decline

Fig 3: Japan’s refining sector (sixth largest in world)

The reasons for the reduction in oil demand are Japan’s declining and aging population, high energy efficiency measures and an expanding fleet of hybrid and electric vehicles. Refinery throughput dropped by 550 kb/d in 2020 due to Covid.

In February 2021 there was an earthquake which hit 20% of Japan’s refining capacity
https://www.reuters.com/article/us-refinery-operations-fuji-oil-co-idUSKBN2AF0YZ

Fig 4: Diesel imports from North East Asian countries and China’s refinery in Brunei

Australia’s declining diesel imports from Japan and to a certain extend from South Korea have been replaced by imports from China, Taiwan and a brand new Chinese refinery in Brunei, thereby creating new dependencies in a concerning context:

7/9/2021 Taiwanese air force responds to incursion by 19 Chinese warplanes as Beijing stays silent
https://www.abc.net.au/news/2021-09-07/chinese-warplanes-enter-taiwanese-air-space/100439132

Fig 5: Diesel imports from China

Fig 6: Diesel imports from Brunei

Demand for Gasoline, Jet Fuel, and Diesel: Checking on the Recovery

February 13, 2021

Demand for Gasoline, Jet Fuel, and Diesel: Checking on the Recovery

Watching for the EV drag on gasoline demand requires a lot of patience.

Gasoline consumption in the US during the four-week period through February 5 was down by 10.1% from a year ago to 7.89 million barrels per day (mb/d), according to EIA data. Gasoline consumption has been down in the range between 9% and 13% since mid-July, following the initial bounce-back from the collapse in March and April:

That Pandemic level of gasoline consumption below 8 mb/d was something that last occurred during the 1990s.

The effects of the pandemic – massive unemployment and working from home, partially balanced by driving instead of taking mass-transit and flying – are short-term factors that have hit gasoline demand, though they too may entail long-term shifts.

But there are also long-term structural demand issues: Peak consumption just before the Pandemic was just barely above the peak before the Financial Crisis 12 years earlier, with a big trough in between:

The EIA tracks consumption of fuel in terms of product supplied by refineries, blenders, etc., and not by retail sales at gas stations.

The structural demand issues become clearer when gasoline consumption is seen in light of population growth. On a per-capita basis, gasoline consumption peaked in 2004 at 477 gallons per person during the year, using Census Bureau population data. This includes gasoline consumption by commercial vehicles, such as delivery fleets, and by taxi and rideshare operations. By 2019, it had dropped by 8.8% to 435 gallons per person. Then in 2020, it plunged by another 13% due to the effects of the Pandemic, to 378 gallons per person, down 21% from the peak:

Watching for the EV drag on gasoline demand. Not yet visible.

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

wolf richter, wolfstreet, gasoline demand, jet fuel, diesel

Ugo Bardi’s The Universal Mining Machine

January 21, 2021

Ugo Bardi’s The Universal Mining Machine

Preface. Below I’ve excerpted some of Ugo Bardi’s “The Universal Mining Machine” (24 January 2008 europe.theoildrum), but I’ve left a great deal out of this excellent article, I encourage you to read all of it if you have time. The biggest problem the world faces is “Peak Diesel”, which is what my book “When Trucks stop running” is about. Bardi points out “that 34% of the energy involved in the US mining industry is in the form of diesel fuel.” Nor are there more minerals to be found: “There is little hope of finding high grade sources of minerals other than those we know already. The planet’s crust has been thoroughly explored and digging deeper is not likely to help, since ores form mainly because of geochemical (especially hydrothermal) processes that operate near the surface.”

Earth’s mineral resources

The Earth’s crust is said to contain 88 elements in concentrations that spread over at least seven orders of magnitude. Some elements are defined as “common,” with concentrations over 0.1% in weight. Of these, five are technologically important in metallic form: iron, aluminum, magnesium, silicon, and titanium. All the other metals exist in lower concentrations, sometimes much lower. Most metals of technological importance are defined as “rare” and exist mostly as low concentration substituents in ordinary rock, that is, dispersed at the atomic level in silicates and other oxides. The average crustal abundance of rare elements, such as copper, zinc, lead and others, is below 0.01% (100 ppm). Some, such as gold, platinum and rhodium, are very rare and exist in the crust as a few parts per billion or even less. However, most rare elements also form specific chemical compounds that can be found at relatively high concentrations in regions called “deposits”. Those deposits from which we actually extract minerals are called “ores”...

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

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