This article is part of Alerts Daily Market News & InsightsPosted on 10/27/2022 8:58:43 AM PDT by absalom01
East Coast fuel markets are facing diesel supply constraints due to market economics and tight inventories.
Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast. These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges.
Back in May 2022, diesel prices rose by $1/gal and supply dried up throughout the Southeast. Over the past few weeks, market volatility has begun to echo the challenges seen in April 2022, as we covered in FUELSNews on Oct 11 and Oct 14. Like before, markets are now seeing extremely high prices in the Northeast along with supply outages along the Southeast.
In many areas, actual fuel prices are currently 30-80 cents higher than the posted market average, because supply is tight. Usually the “low rack” posters can sell many loads of fuel before running out of supply; now, they only have one or two loads. That means fuel suppliers have to pull from higher cost options, at a time when low-high spreads are much wider than normal. At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity. <emphasis added>
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.
This article is part of Alerts Daily Market News & Insights
The media are soft-pedaling this, but this hits costs at every stage of the supply chain, and best case, won't get worked out until spring. Buckle up!
Interesting.
Two weeks ago I took a trip from Indiana to S. Carolina and as I went farther south the gas (not diesel) prices dropped about a dollar a gallon.
I drive a diesel car.I don’t live in the region depicted but I do live in a region where *many* homes are heated by oil. Diesel’s already close to $6 a gallon here and I’m sure it will go higher.But the question is will I be able to get all I want.
Paid $4.67 a gallon for diesel in my truck yesterday. Absurd given how much supply there is. We need new refineries and at these prices, increased domestic production of crude.
Diesel stores well (if you add biocide).
Not sure if your dwelling is suitable for adding that capability.
That’s about the same here in Houston.
That said, this piece doesn’t address retail fuel availability, but is directed at major shipping fleets which should be upstream of the retail supply.
Would be nice if the media would notice that the green agenda has significant impacts on people’s lives.
railroad strike coming too......
Ping
$6/gal. and I have a 500 gal tank. Jesus, I am looking at a $3000 bill in Nov. just for fuel and another $1,000 for property taxes.
The world economy runs on diesel. A shortage will impact everything everwhere.
"Had a liberal acquaintance argue with me that just because we are low on diesel doesn’t mean gasoline will follow suit.
I told him to stop being a moron.
He persisted and I was forced to point out that gasoline gets delivered by those big round thingies with wheels
THAT ARE PULLED BY DIESEL POWERED TRUCKS."
Well played ! Well stated and totally accurate !
He must be a relative of AOC, who believes that electricity just comes out of her wall, with no regard for the source of that energy.
Diesel was about $1.70 more than premium in the ATL area the last I looked, which was about a week ago. ~$3.30 for premium and $5 for diesel. I’ll fill up later today and try to get a diesel price too, and try to remember to report back.
Diesel alternate production methods:
1) Bio-Diesel from oil plants
2) Bio-Diesel from algae
3) Diesel equivalent from long chain alcohols - Natural Gas conversion to Hexanol
4) Diesel equivalent from conversion of coal to syngas to hexanol
#1 and #2 could be spearheaded by Dept of Agriculture
#3 could be done at home. Likely would require States to change building codes and fuel laws/taxes
#4 would require significant investment so likely to only work if a project were started by Dept of Energy. (Thorium salt reactor to convert coal to syngas is likely required to be feasible on a large scale)
Diesel fuel costs are on of the most inflationary costs that we have in the market today. All goods, food and services have a dependance on diesels somewhere in their supply chain. If you want to quickly impact the cost of inflation, get diesel down to a retail cost of less than $2 per gallon.
No new refineries have been built in the last 30 years. Due to Biden's BS, lots of them have closed. Execs from Valero say they will not re-open the closed refineries with the extremely unfavorable business and capital policies in place.
Thanks for this useful site and info.
Diesel alternate production methods:
1) Bio-Diesel from oil plants
2) Bio-Diesel from algae
3) Diesel equivalent from long chain alcohols - Natural Gas conversion to Hexanol
4) Diesel equivalent from conversion of coal to syngas to hexanol
#1 and #2 could be spearheaded by Dept of Agriculture
#3 could be done at home. Likely would require States to change building codes and fuel laws/taxes
#4 would require significant investment so likely to only work if a project were started by Dept of Energy. (Thorium salt reactor to convert coal to syngas is likely required to be feasible on a large scale)
Diesel fuel costs are one of the most inflationary costs that we have in the market today. Farms use diesel, trains use diesel, 18 wheelers use diesel, local delivery trucks use diesel. In fact, ALL goods and services have a dependance on diesel somewhere in their supply chain. If you want to quickly impact the cost of inflation, get diesel down to a retail cost of less than $2 per gallon.
How did we arrive at "poor pipeline shipping economics"? That doesn't pass the smell test. Pipelines are very economical compared to trucks and trains. Did half of our pipelines blow up or half of our pumps failed and cannot be repaired? How did pipeline economics change? The author is blowing senseless smoke.
"Historically low diesel inventories" is a CAUSE of shortages? What the hell does that mean? Low inventory is a RESULT of shortages. What a nonsensical statement.
Why doesn't the author discuss Brandon's actions from Day 1 to shut down the fossil fuel industry?
Just based on that one sentence alone, I conclude the author is not very bright and the article not very insightful.
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