Posted on 03/22/2022 4:14:26 PM PDT by blam
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:
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.
Hardy said the shift to more diesel consumption over gasoline in Europe had helped to create shortages of the fuel. He added that refineries could boost their diesel output in response to higher prices at the expense of other oil-derived products to shore up supply, but warned that rationing was a possibility.
Torbjorn Tornqvist, co-founder and chair of Geneva-headquartered Gunvor Group, added: “Diesel is not just a European problem; this is a global problem. It really is.”
Tornqvist also warned that European gas markets were no longer functioning properly as traders faced huge demands from banks for cash to cover hedging positions. “I think it’s broken. It really is,” he said. “I never thought that somebody could say ‘ah, gas has fallen below 100 per megawatt hours is really cheap’.”
Gas futures linked to TTF, Europe’s wholesale gas price have swung from about €70 a megawatt hour before Russia’s invasion of Ukraine to about €230 two weeks ago and then slid below €100 this week. Before May 2021, European gas prices were below €20 a megawatt hour.
As noted last week, Europe’s largest energy traders called on governments and central banks to provide emergency liquidity support to keep gas and power markets functioning as sharp price moves triggered by the Ukraine crisis have strained commodity markets. Hardy said that to move a cargo equivalent to 1 megawatt hour of liquefied natural gas priced at €97, traders must provide €80 in cash, straining their capital requirements.
Worse, confirming that Europe faces an even colder winter, Tornqvist said European utilities would struggle to fill gas storage for next winter given the “paralysed” state of the spot market for gas unless policymakers stepped in to provide guarantees to protect buyers against price swings.
But going back to diesel, Bloomberg’s Javier Blas tweeted a handful of the scariest quotes from the energy CEOs at today’s FT commodities summit:
•Trafigura CEO Jeremy Weir: “The diesel market is extremely tight. It’s going to get tighter and will probably lead into stock outs” referring to when fuel stations run dry.
•Gunvor CEO: “Europe is so short of diesel”
•Vitol CEO: “The thing that everybody’s concerned about will be diesel supplies”
Needless to say, without diesel, not only will traffic in Europe grind to a halt, but much if not all US truck based logistical support and supply chains will soon be paralyzed. The consequences for the global economy will be dire.
Oh, this one is easy. I heard it from Mayor Mannequin Pete: Just buy an electric over the road truck. See? Fixed!
More bs they will use to excuse their bad policies.
Panic! Panic! Panic! Fear! Fear! Fear!
*click*
TV off.
Europe problem
Mayor Mannequin Pete gives out free avice to everyone. He's good that way. Europe is where Paris is, right? Pete loves the Paris Accords. It's all good.
Part of me says this is just more fear porn.
Another part says I’m looking at yet another crack in our economic dam, and that dam is about to give way all at once.
This is hair on fire def con 5. If it was as dire as stated, I would expected traders to have bid up prices far higher. Sounds like our article drama queen is trying to scale out of a large long position.
Economic warfare has consequences. We declared total economic war on Russia. The U.S.and more so the EU depends on imports with a good portion of that with the country we are at war with. People need to wake up this is World war III some would argue IV since we won the “cold war” which in reality was very hot all over the world. Rationing is part of global conflict not just fuels but food and metals. Rationing is also the only alternative to letting the market set the price which naturally will skyrocket when demand exceeds supply.
Europe went real heavy into diesel cars, so their percentage of diesel vs gasoline is higher than ours. I think part of their problem is gonna be the mix because you can only split the crude into certain percentages of product.
Russophile.org is an Indonesian web site run in English. Whois shows them to be owned by "rajawali" in the state of Jawa Tengah, and purports to use independent sources. Registered through GoDaddy, 2020-08-31.
So another authoritative source for news -- begging donations on the web page and seeking links with all the various social media -- should one care to accept this. Hmm.
A cargo cult is an indigenist millenarian belief system in which adherents perform rituals which they believe will cause a more technologically advanced society to deliver goods.
https://en.wikipedia.org/wiki/Cargo_cult
Very happy there are 4 refineries within 30 miles of my home that get their oil from the Alaska pipeline. Oil from North Dakota is exported from here.
Diesel may be expensive, but very available here.
Where’s the “BOMBSHELL” “BOOM” “BREAKING” a breathless Hannity...We’re fine...
The “fear porn” doesn’t go far enough. Consider that our railroads run their engines on diesel. That’s true for freight trains, that’s true for Amtrak, that’s true for some mass transit.
Read more at: https://www.bloombergquint.com/politics/trafigura-and-gunvor-say-europe-is-heading-for-a-diesel-shortage Copyright © BloombergQuint
A lot of cars in Europe switched to Diesel engines.
The real issue is trucks and cargo ships. And I guess cruise ships too. They are powered by diesel engines and diesel generators for all their on board electronics.
The Amtrak Northeast Corridor, the only part that makes money, is electrified. The rest of Amtrak should be shut down.
Diesel fuels American agriculture and there are not even prototypes of electric tractors combines and semi trucks not that recharging a battery would be remotely feasable in the middle of a farm field. The Green New Deal’s war on fossil fuel could mean bread lines and mass malnutrition like in Venezuela.
This ain’t fear porn. The headline may be a little click-baity but the story is true: Europe is at severe risk in running short of diesel. And a huge fraction of automobiles there run on diesel as well as heavy trucks and equipment.
This is a great opportunity for US refiners to export diesel to Europe. It’s not so great for US diesel consumers because Brandon’s energy policies are designed to increase fuel prices.
Anyway, the prospect of international pricing of oil in Chinese yuan is even more ominous.
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