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Diesel shortage?

Unread postPosted: Mon 03 Apr 2006, 14:52:31
by Leanan
Came across this "odd news" story:

http://msnbc.msn.com/id/12072827/

It's about a man who accidentally left his wife behind at Wal-Mart. They were retirees, driving a motor home; thought she was in back and drove off while she was in the store.

But this is the part that caught my attention. Turns out, he couldn't come back to get her, because he was out of fuel and stranded.

State police had been alerted to watch for the motor home, and officers in Tucumcari spotted it that evening, out of fuel on a side street. A snowstorm and a backup of tractor-trailers had made diesel fuel hard to come by in the eastern New Mexico community.


Maybe we ought to re-think this "just in time" delivery thing...

Re: Diesel shortage?

Unread postPosted: Mon 03 Apr 2006, 18:35:08
by PeakOiler
One must remember that there isn't much of anything in eastern New Mexico/West Texas, except the wind and cacti, and perhaps the one small gas station located in the middle of nowhere didn't order enough. Those are the places that have those signs: "Warning: No Gas Stations for the next 150 miles".
;)

Re: Diesel shortage?

Unread postPosted: Wed 25 Apr 2018, 19:55:51
by pstarr
Image

Haven't seen stocks this low since sometime around late 2013, the height of the Greatest Recession Ever.
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Re: Diesel shortage?

Unread postPosted: Thu 26 Apr 2018, 03:02:36
by Outcast_Searcher
pstarr wrote:Haven't seen stocks this low since sometime around late 2013, the height of the Greatest Recession Ever.

Except late 2013 was over 4 years AFTER the end of the "great" recession.

https://www.statista.com/statistics/188 ... ince-1990/

https://www.thebalance.com/us-gdp-by-year-3305543

https://www.thebalance.com/2008-financi ... is-3305679

Hint: In the real world, a recession means real GDP is falling, not rising.

Re: Diesel shortage?

Unread postPosted: Thu 26 Apr 2018, 08:23:13
by Tanada
The end of 2013 Americans were not buying a lot of Diesel because prices were well north of $4.00/gallon in the midwest where I live. As a consequence because so much cargo shifted to rail transport where it legitimately belongs that the big producers made more by exporting that same Diesel overseas, which drove stocks down without changing much of anything else. This link from December 2013 shows the refiners were producing; 3.7 MM/bbl/d of distillate fuels .

This link from the same week of the year in 2017 just four months ago shows we were producing 4.0 MM/bbl/d of Distillate fuels.

However right now at the current sale price the refiners/wholesalers are making more money by selling that Diesel fuel domestically because demand is relatively robust while prices are still in the $3.00/gallon range. This makes it advantages to keep more Diesel here in storage rather than shipping it overseas for the world market. Econ 101.

Re: Diesel shortage?

Unread postPosted: Thu 26 Apr 2018, 09:55:33
by vtsnowedin
This weeks weekly report has these two quotes about distillates (diesel).
Distillate fuel production
decreased last week, averaging 5.0 million barrels per day.

And further down the report.
Distillate fuel product supplied averaged over 4.0 million barrels
per day over the last four weeks, down by 2.5% from the same period
last year. Jet fuel product supplied is up 6.2% compared to the same
four-week period last year.

Now producing 5 while selling 4 each day should equal a build but that does not appear to be the case with a decline in stocks of 2.6mb for the week.
I suspect a deeper look into the whole status sheet will explain that but at any rate we have about a thirty day supply on hand and steady production so there is no problem with the current supply status.

Re: Diesel shortage?

Unread postPosted: Fri 27 Apr 2018, 13:55:52
by ROCKMAN
T – Good point. But the thread title brings me back to the same point I’ll forever keep beating on. Which is: define a shortage. For the Rockman it’s simple: when there are buyers who can afford the price of diesel but there’s not enough to satisfy all those potential buyers. And that would be a very rare condition to develop: sellers wold simply raise prices and eliminate those potential buyers. IOW raise prices until supply equals demand. With demand defined as the volume of diesel buyers can afford to buy.

The most like scenario for a diesel “shortage” would be govt price controls. Say the feds mandated that diesel could only sell for $0.75 per gallon. I doubt every buyer with funds to purchase the fuel could find all they wanted. IOW there would be a diesel shortage. In such a situation I’m sure refineries would adjust their blended oil to minimize the diesel yield. But there would still be some yield that would go to storage. Until it was no longer practical to build more storage. At that point there could be a movement to flare diesel production just as we flare stranded NG production today. But obviously not a very likely scenario to develop.

Re: Diesel shortage?

Unread postPosted: Sun 29 Apr 2018, 03:06:15
by Outcast_Searcher
ROCKMAN wrote:T – Good point. But the thread title brings me back to the same point I’ll forever keep beating on. Which is: define a shortage. For the Rockman it’s simple: when there are buyers who can afford the price of diesel but there’s not enough to satisfy all those potential buyers. And that would be a very rare condition to develop: sellers wold simply raise prices and eliminate those potential buyers. IOW raise prices until supply equals demand. With demand defined as the volume of diesel buyers can afford to buy.

The most like scenario for a diesel “shortage” would be govt price controls.

Absolutely right. When the US government tried price controls in the 70's during the big oil price spikes due to the Middle East turmoil, we got long gas lines and "out of gas" conditions, as people resorted to hoarding, etc.

Unless ETP theory turned out to be magically correct and suddenly producers couldn't "afford" to produce oil and consumers couldn't "afford" the necessary price raises needed to fund producing it EN MASSE, simple economics re competitive markets and the pricing function takes care of the "problem".

Now (for one example) idiots who bought a $50,000 huge diesel guzzling truck they can't afford, and can't afford rising oil prices at some point -- the result is kind of harsh on them.

Doomers would claim that's a sign of doom. Others would call that a "teaching moment" for the idiots (and if in a pinch, cheap used, high MPG sedans do exist).

Re: Diesel shortage?

Unread postPosted: Sun 29 Apr 2018, 05:15:02
by EdwinSm
OS, I think you are right in that the government would most likely want to first use price rises to 'ration' any diesel (or other fuel) rather than bringing in the type of rationing that at least Europe saw in World War II (ie ration cards, or smart apps as they would use today).

I think it would be politically easier to let the "market" do the rationing rather than the government, until the injustice of this is too obvious (eg ambulance services not able to afford fuel) when formal rationing might be brought in. Or at least a hybrid system with some fuel allocated to "essential services" at a controlled price and a price free-for-all for everyone else.

Re: Diesel shortage?

Unread postPosted: Sun 29 Apr 2018, 18:30:32
by Outcast_Searcher
EdwinSm wrote:I think it would be politically easier to let the "market" do the rationing rather than the government, until the injustice of this is too obvious (eg ambulance services not able to afford fuel) when formal rationing might be brought in. Or at least a hybrid system with some fuel allocated to "essential services" at a controlled price and a price free-for-all for everyone else.

Since the reality for medical services in the US, at least thus far, seems to be they charge whatever they want and generally get away with it, I would think ambulance services would be about the LAST entity to give up buying fuel because "they are unable to afford it".

OTOH, I think your idea of a hybrid system where the taxpayer is left to fend for themselves seems likely. After all, who ever cared (in reality) about the taxpayer, representing the halls of government (beyond lip service to buy votes)?

Re: Diesel shortage?

Unread postPosted: Tue 01 May 2018, 11:07:36
by ROCKMAN
Guys - Such a system has been in place for many years. Sun Coast is one of the largest (if not THE largest) fuel hauler in the country:

"Sun Coast Resources, Inc. is the leading emergency fuel response service provider in the country. We provide 24/7 generator fueling, on-site fueling and dedicated fuel trucks to companies and government agencies during emergencies including severe weather conditions, hurricanes, tornadoes, floods and other disasters. In the past, we have provided critical fuel supply services to governmental agencies, utilities, communication companies, hospitals, delivery services, grocery stores, restoration and other fleet and equipment operators."

https://www.suncoastresources.com/emerg ... y-fueling/

Re: Diesel shortage?

Unread postPosted: Mon 07 May 2018, 19:45:16
by StarvingLion
Outcast_Searcher wrote:
ROCKMAN wrote:T – Good point. But the thread title brings me back to the same point I’ll forever keep beating on. Which is: define a shortage. For the Rockman it’s simple: when there are buyers who can afford the price of diesel but there’s not enough to satisfy all those potential buyers. And that would be a very rare condition to develop: sellers wold simply raise prices and eliminate those potential buyers. IOW raise prices until supply equals demand. With demand defined as the volume of diesel buyers can afford to buy.

The most like scenario for a diesel “shortage” would be govt price controls.

Absolutely right. When the US government tried price controls in the 70's during the big oil price spikes due to the Middle East turmoil, we got long gas lines and "out of gas" conditions, as people resorted to hoarding, etc.

Unless ETP theory turned out to be magically correct and suddenly producers couldn't "afford" to produce oil and consumers couldn't "afford" the necessary price raises needed to fund producing it EN MASSE, simple economics re competitive markets and the pricing function takes care of the "problem".

Now (for one example) idiots who bought a $50,000 huge diesel guzzling truck they can't afford, and can't afford rising oil prices at some point -- the result is kind of harsh on them.

Doomers would claim that's a sign of doom. Others would call that a "teaching moment" for the idiots (and if in a pinch, cheap used, high MPG sedans do exist).


Here is why you are hopelessly doomed, Outcast_Searcher. You'll be worm food by 2023. I call it The Oil Apocalypse:

http://peakoilbarrel.com/open-thread-pe ... /#comments

George Kaplan
Ignored
says:
05/07/2018 at 12:45 am

Pretty good, if a little slanted towards the economist’s view rather than petroleum engineer’s – I guess they are some kind of investment firm are they? I always like the price predictions that show things historically swinging all over the place and then a nice smooth linear or exponential trend off into the future, but that’s been avoided here (just showing actual futures).

I think he didn’t make the case for the drop off in recent discoveries being as important as it is going to prove; I think he probably thinks everything gets solved there at the right price level.

There is the assumption of 19 mmbpd new production to 2022 from in-fill drilling. I don’t know how that is arrived at. In-fill wells accelerate production but don’t do so much to grow reserves. They can also be used to get round surface constraints like water injection/processing limits, but there’s a limit, especially on mature fields. A lot of the low hanging fruit was picked in the high price years. In-fill wells on deep water fields can be very expensive, and on recent projects that have been more optimally designed with latest seismic data and often have production heavily front loaded, may not not yield so much. If that amount of in-fill is achieved then I’d suggest production will drop like a stone after 2022, when there are no more opportunities in mature fields and relatively fewer new fields that might be receptive to it (he almost touches on this in the slide on accelerating decline rates). The drop off in discoveries also means there are fewer short cycle tie-back opportunities – the very last ones with around 10 mmbbls are just being used up in the North Sea, smaller ones don’t produce much and might be marginal at any oil price.