Joined: Oct 23, 2004 Posts: 5897 Location: New Jersey
Posted: Tue Mar 11, 2008 9:37 pm Post subject: Re: Record Diesel engine fuels price thread.
As I explained in some other threads the last week or so, the shortage of diesel is driving the price of oil higher.
Quote:
There is an imbalnce developing in the output of each barrel as compared with what was previously desired - even as little as a year ago. I am not a chemical engineer, but the output of each barrel of oil can be adjusted with certain parameters. US refiners are said to be the most adept at adjusting to changing quality.
However there is a limit. Diesel is in higher demand, especially in Europe. This has actually created a surplus in winter blend gasoline, as extra gasoline moves from Europe to the US. (Summer blend gasoline requires akylate, which takes special refining and processing, and is in short supply), while a diesle shortage persists in Europe.
The problem is there is not enough diesel even though winter gasoline is available (outside of central Canada). So more oil has to be refined to get the products needed.
Refiners are making a good profit on diesel, that may offset the low profit on gasoline.
To put it simply, the increased demand for diesel can only be met by increased refining of crude oil - even if that leaves us with a surplus of other types of oil products.
The Wall Street Journal has caught on to this (does it read PO.com?), and provides some details.
Quote:
Diesel Demand Remains Strong
Some Refiners See Further Opportunity Despite Price Rise
By ANA CAMPOY
March 12, 2008; Page A4
Oil and gasoline prices are again at new highs. But many in the U.S. refining industry are focusing on prices for another key liquid: diesel.
Diesel has followed the petroleum surge, ending yesterday at $3.82 a gallon, based on government data. Much as gasoline has pressured consumers, diesel is pressuring businesses that depend on the fuel.
But some in the refining industry see an opportunity. Their bet: Diesel is poised to take off. While skyrocketing prices have weakened demand for gasoline in recent months, global diesel demand has been growing.
Some analysts expect continued strong diesel-demand growth. In Europe, diesel will continue gaining market share at the expense of gasoline as consumers switch to diesel-powered cars. Developing countries such as China and India are consuming more energy. Those countries often prefer diesel over gasoline because of its flexibility: the fuel can be used to power industrial plants as well as transportation.
In the short-term, U.S. refineries that are set up mainly to produce gasoline have little flexibility to churn out more supplies of diesel. To increase capacity, refineries would have to invest heavily in new equipment. The U.S. will also have a hard time attracting barrels of diesel from abroad because of strong demand elsewhere, meaning the diesel market in the U.S. will continue to be tight.
Posted: Wed Mar 12, 2008 11:43 am Post subject: Re: Record Diesel engine fuels price thread.
DantesPeak said:
Quote:
To put it simply, the increased demand for diesel can only be met by increased refining of crude oil - even if that leaves us with a surplus of other types of oil products.
Last year 161,000 independent truckers parked their rigs for good. Increased fuel cost were sited as the prevalent reason.
My contacts in the mining industry are saying that higher fuel costs are shutting down many smaller operators. This is hitting smaller firms first because the smaller firms, being less well capitalized, are using lower initial cost, older, less fuel efficient equipment. With them go a lot of higher paying jobs.
Joined: Oct 03, 2004 Posts: 522 Location: Washington State
Posted: Wed Mar 12, 2008 3:40 pm Post subject: Re: Record Diesel engine fuels price thread.
we've several stations with fuel over 4.00, and one with it at 3.49. All are a bunch more than my $1.50 homebrew! The natives are getting restless though! _________________ This is where everybody puts profound words written by another...or not so profound words written by themselves
Highlander 2007
Joined: Apr 05, 2005 Posts: 1628 Location: Springsteen Country (NJ)
Posted: Wed Mar 12, 2008 9:51 pm Post subject: Re: Record Diesel engine fuels price thread.
I posted this in the gasoline record price thread, but I'll put it here too. This is the largest spread between gas and diesel I've ever seen.
I took this earlier today with my cell phone:
_________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
Joined: Oct 23, 2004 Posts: 5897 Location: New Jersey
Posted: Wed Mar 12, 2008 10:15 pm Post subject: Re: Record Diesel engine fuels price thread.
Quote:
Diesel: Fuel for Inflation?
Truckers Face Record Pump Prices to Get Goods to Stores
By Steven Mufson
Washington Post Staff Writer
Thursday, March 13, 2008; Page D01
The auto club AAA reported yesterday that both diesel and gasoline prices smashed previous highs. Gasoline rose to a nationwide average of $3.246 a gallon for regular unleaded. Diesel, which has been setting records almost daily for the past three weeks, hit a nationwide average of $3.876 yesterday.
The average price of diesel fuel has been shooting up even faster than that of gasoline, rising more than 50 cents in barely two months. That is not only squeezing profit out of the trucking business but is also driving up the cost of delivering all kinds of goods to American consumers.
Joined: Oct 23, 2004 Posts: 5897 Location: New Jersey
Posted: Thu Mar 13, 2008 10:34 am Post subject: Re: Record Diesel engine fuels price thread.
The wholesale price of diesel is moving up rapidly again today, possibly pushed along by the maintenence of an important refinery producing diesel and gasoline.
Quote:
ExxonMobil on Mar 13 began about two months of planned turnaround maintenance at a fluid catalytic cracking units at its Beaumont, Texas, refinery.
Joined: Apr 05, 2005 Posts: 2472 Location: South of Atlanta
Posted: Thu Mar 13, 2008 11:17 am Post subject: Re: Record Diesel engine fuels price thread.
Anyone have a handle on what is going on with Diesel inventory? What about Canada and Europe? Seems there is something very serious up with this. Maybe we are not getting the whole picture?
I dont think we have ever seen such spreads with diesel so much higher than regular gasoline.
Joined: Oct 23, 2004 Posts: 5897 Location: New Jersey
Posted: Sat Mar 15, 2008 10:15 am Post subject: Re: Record Diesel engine fuels price thread.
Here is a better than average article on the effect soaring diesel prices are having on the trucking industry in the US:
Quote:
Truck firms fuming about high gas prices
With 12 years experience running a trucking company, Chad Bowen thought he’d seen it all.
But in the past year, the owner of Bowen Enterprises Inc. in Sparks said he’s witnessed something he’s never seen before.
“For the first time, we’ve actually paid more for fuel than we have for our drivers,” said Bowen, whose company boasts a fleet of 40 flatbed trucks and 25 refrigerated trailers.
As diesel prices accelerate to record levels, U.S. truck operators such as Bowen are fuming about skyrocketing fuel costs. In the past month alone, the cost of diesel jumped from an average price of $3.383 per gallon in February to a new high of $3.938 per gallon Friday, according to AAA’s daily fuel gauge report. The average price of diesel a year ago was $2.744 per gallon.
Truckers in the West are especially affected, given the region’s traditionally higher fuel prices compared to the rest of the nation. California, the top destination for Nevada’s trucks, according to the Bureau of Transportation Statistics, has diesel prices topping $4 per gallon in most metro areas, according to AAA. For Nevada truckers refueling in those places, that makes an already big problem even worse.
Posted: Sat Mar 15, 2008 11:00 am Post subject: Re: Record Diesel engine fuels price thread.
Are we seeing the first chronic shortages to hit the OECD? Diesel consumption has been growing much faster than petrol/gas in recent years and makes up a smaller fraction of refinery output. Gas typically gets more press because it's the most used fuel for American drivers, but it is diesel that really provides the life-blood of the transportation (and agro) economy.
Joined: Apr 28, 2005 Posts: 3647 Location: West shore Lake Eire, MI, USA
Posted: Sat Mar 15, 2008 11:42 am Post subject: Re: Record Diesel engine fuels price thread.
Just how hard is it to process Gasoline chemically to make it into Kerosene (Diesel #1) and Fuel Oil (Diesel #2)????
Seems lie if you have a surplus of a fuel it would be in your financial interest to convert some of that surplus into the fuel you are short on. _________________ Oxygen: - An intensely habit-forming accumulative toxic substance. As little
as one breath is known to produce a life-long addiction to the gas, which addiction invariably ends in death.--Isaac Asimov
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