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Sorry! Diesel prices are likely to climb again soon

Sorry! Diesel prices are likely to climb again soon

Behind the scenes of why fuel is so expensive in 2022

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

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

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

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

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

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 

“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”

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.

Widespread US Diesel Shortages Send Crack Spreads To Mindblowing Highs

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

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!

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

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

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

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

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

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…

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