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.
Another reason that 20 year old gas hog v10 or big 8 is worth another couple grand?
At what point do the Governors in Texas, Oklahoma, North Dakota, etc tell CornPop to STFU and turn the back on?
Who are they gonna send? Marshals, FBI? When they show up let them be met by the Texas Rangers, State Police, Sheriffs Dept and National Guard. They try to federalize the Guard, refuse the order.
Very simple, actually.
I read in one post on here that if the price of diesel goes above $7.50/gallon, our supply chain will basically collapse. People simply won’t be able to afford to drive the trucks with that price.
Exactly
Good way to get everyone off gas! So Communistic!
National diesel average trends down but remains above $5 per gallon
March 22, 2022
Coming in at $5.134 per gallon, the national average fell $0.116 cents below the all-time high set, for the week of March 14, at $5.250 per gallon. These are the only two weeks to eclipse the $5 per gallon mark as per EIA data.
National diesel average tops the $5 per gallon mark, setting a new record
March 15, 2022
Another week brings another new record high for the average price per gallon of diesel gasoline. That was made clear in data issued this week by the United States Energy Information Administration (EIA), which showed that the national diesel average, for the week of March 14, set a new record and topped the $5 per gallon mark, for the first time ever, coming in at $5.250 per gallon.
https://www.supplychain247.com/special/diesel_prices/rail
And this is more than just gasoline and diesel.
https://www.ranken-energy.com/index.php/products-made-from-petroleum/
PRODUCTS MADE FROM OIL AND NATURAL GAS
When you think about oil, there is probably one thing that immediately comes to mind: motor oil for your car or lawn mower. And, when you hear about natural gas, you may think about heating your home, cooking, or even electric power generation. But, there are many other uses for these hydrocarbons than what meets the eye.
Petrochemicals derived from oil and natural gas make the manufacturing of
over 6,000 everyday products and high-tech devices possible. Major petrochemicals—including ethylene, propylene, acetylene, benzene, and toluene, as well as natural gas constituents like methane, propane, and ethane—are the feedstock chemicals for the production of many of the items we use and depend on every day.
Modern life relies on the availability of these products that are made in the United States and across the globe. We zero in on some of these common household and commercial products below. The list may surprise you!
OIL and Natural Gas
Adhesive, Air mattresses, Ammonia, Antifreeze,Antihistamines, Antiseptics, Artificial limbs, Artificial turf, Asphalt, Aspirin, Awnings
Backpacks, Balloons, Ballpoint pens, Bandages, Beach umbrellas, Boats
Cameras, Candies and gum, Candles, Car battery cases, Car enamel, Cassettes, Caulking, CDs/computer disks, Cell phones, Clothes, Clothesline, Coffee makers, Cold cream, Combs, Computer keyboards & monitors,Cortisone, Crayons, Credit cards, Curtains
Dashboards,Denture adhesives, Dentures, Deodorant,Detergent, Dice, Dishwashing liquid, Dog collars, Drinking cups, Dyes
Electric blankets,Electrical tape, Enamel, Epoxy paint, Eyeglasses
Fan belts, Faucet washers, Fertilizers,Fishing boots & lures, Floor wax, Food preservatives,Footballs, Fuel tanks
Glue, Glycerin, Golf bags, Golf balls, Guitar strings
Hair coloring, Hair curlers, Hand lotion, Hearing aids, Heart valves, House paint, Hula hoops
Ice buckets, Ice chests, Ice cube trays, Ink, Insect repellent, Insecticides, Insulation, iPad/iPhone,
Kayaks
Laptops, Life jackets, Light-weight aircraft, Lipstick, Loudspeakers, Lubricants, Luggage
Model cars, Mops, Motorcycle helmets, Movie film
Nail polish, Noise insulation, Nylon rope
Oil filters
Packaging, Paint brushes, Paint roller, Pajamas, Panty hose, Parachutes, Perfumes, Permanent press, Petroleum jelly, Pharmaceuticals, Pillow filling, Plastics, Plywood adhesive, Propane, Purses, Putty
Refrigerants, Refrigerator linings, Roller skate wheels, Roofing, Rubber cement, Rubbing alcohol
Safety glasses, Shampoo, Shaving cream, Shoe polish, Shoes/sandals, Shower curtains, Skateboards, Skis, Soap dishes, Soft contact lenses, Solar panels, Solvents, Spacesuits, Sports car bodies, Sunglasses, Surf boards, Swimming pools, Synthetic rubber
Telephones, Tennis rackets, Tents, Tires, Tool boxes, Tool racks, Toothbrushes, Toothpaste, Transparent tape, Trash bags, Truck and automobile parts, Tubing, TV cabinets
Umbrellas, Unbreakable dishes, Upholstery
Vaporizers, Vinyl flooring, Vitamin capsules
Water pipes, Wind turbine blades
Yarn
Sounds like a futures trader pump to me.
Hair on fire, world will end and all that.
Bring more money.
When you are trading at size you always talk your book. If acquiring you say the price will crash, expect a cease fire at any moment, expect OPEC to massively start pumping.
Then once you’ve scaled in fully you make the noises in this article.
A Russian site, BTW, despite not having .ru in the domain name. Not surprising that they’d concoct a scenario where sanctions would have dreadful effects in the West, especially in Europe. Europeans frighten easily, I guess.
I hear ya....but Normalcy bias is a “cognitive” bias which leads people to disbelieve or minimize threat warnings. Consequently, individuals underestimate the likelihood of a disaster, when it might affect them, and its potential adverse effects.
The Great Reset awaits.
Bookmark.
Easy. Just buy an electric truck. /s
"Bloomberg | Quint is a multiplatform, Indian business and financial news company. We combine Bloomberg's global leadership in business and financial news and data, with Quintillion Media's deep expertise in the Indian market and digital news delivery, to provide high quality business news, insights and trends for India's sophisticated audiences."
So Bloomberg | Quint is a Bloomberg subsidiary, more or less.
It is certain that petroleum-based product prices were and are rising, a large function of this being the Russian-supplied energy to Europe. As a once-upon-a-time legal resident of Germany, the forecast was clear to all who would see dispassionately.
The "center right" along with the various center to far left played the green game, pretending that economic realities would not bite. The chewing on European economies gathers speed, and it is "delicious." ex-chancellor Schröder's decades long employment by the Russian energy sector and ex-chancellor Merkel's "energy turnaround" placed Germany in Russia's economic hands. What could have ever gone wrong?
Bloomberg and Bloomberg|Quint are reporting "duh." Of course there was going to be an energy shortage, as the idiots atop the EU Commission (the head is German) rolled on with their green games. Add in the European "member states" who produce little to no energy -- as has been foreseen by anyone not publicizing the lunacy of "green" and "sustainable" wind and solar -- wonder now "what's happening?" Consequences are happening to those with "eyes wide shut."
FarCenter -- Since Feb 22, 2022 -- welcome to a newbie by a realtive newbie to FR.
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