Tag Archives: diesel

Business/Economics, U.S.

What Economic Recovery? East vs West? Gas & Diesel prices shooting up! It ain’t the oil prices! Supply is up, demand is down or are they? California refineries going down, again!

Reports out of Los Angeles, California, gasoline prices more than $4.00 USD per gallon (more than $1.00 per liter).   A 23 cents jump in one week!

In the southeastern Idaho city of Pocatello, gasoline prices have gone up about 25 cents in the past two weeks.  Prices for the more efficient Diesel fuel are about to break the $4.00 mark, but are actually unchanged for the past two weeks.

Once again we can’t blame U.S. oil prices, they’re still under $100 per barrel.

The last time I looked into seemingly unexplained fuel price increases it turned out it was a matter of fuel refined in the western half of the country being shipped off to the more populous eastern half to take up the slack caused by their fuel shortage.

The result was fuel prices stayed lower in the eastern half of the country, but went up for us westerners because our supplies went down! (in the case of California, they had too many refineries down, and their fuel laws make it almost impossible to import refined fuels from out of state)

According to the latest data from the U.S. Energy Information Agency (USEIA) total weekly refined gasoline (Total Motor Gasoline) stockpiles, for the whole country, are up from December, by about ten thousand barrels!  As well, total weekly stockpiles of DSO (Diesel) are up from December, by more than 10,000 barrels!

Aw, let’s break it down into the separate Petroleum Administration for Defense Districts (PADD).

I checked PADD 4 (aka Rocky Mountain PADD, serves my area) and discovered that Total Motor Gasoline weekly stockpiles are down from December by 570 barrels.  Distillate Fuel Oil (DSO/Diesel) stockpiles down by 143 barrels.  So supply has gone down for the Rocky Mountain area.

PADD 5 (West Coast) shows an increase in weekly stockpiles for both gasoline and Diesel.

PADD 3 (Gulf [of Mexico] Coast) also shows an increase in stockpiles of gas and Diesel.  The same for PADD 2 (Midwest), as well as PADD 1 (East Coast).

Is a decrease in stockpiles in PADD 4 the cause of price increases across the country, while all other PADDs show increases in stockpiles?

Is it demand?  According to a recent report out of California, demand for fuel was down (again) for the third quarter of 2012. That claim is based on California fuel tax collections.

However, the USEIA says overall demand for gasoline, across the country, is up from the same time last year.  For 27 January 2012 demand was at 8.018 million barrels per day (MBpD).  As of 25 January 2013 demand was at 8.501 MBpD.  When you’re talking about MBpD that nearly 0.5 increase is a lot.

Now lets look at demand for Diesel.  There should be no reason for Diesel prices to be going up, because the USEIA data shows a slight drop in demand from the same time last year.  On 27 January 2012 demand was at 3.73 MBpD, while data for 25 January 2013 shows demand was at 3.72 MBpD.

So far I can’t find a reason for increasing gas and Diesel prices.  Overall demand is up for gas, but so is overall supply! Diesel prices should be going down, because overall demand is almost unchanged from last year, and overall supply is up from the month prior!  (PADD 4 supply is down, and I couldn’t find any USEIA demand data by PADD)

Regarding PADD 4 area.  Although prices are going up, they’re still considered the lowest on average for the whole United States.

Here’s another possibility for fuel prices going up:  In mid January a lot of U.S. refineries announced they were closing down for maintenance.  Perhaps the price increase is the result of fuel suppliers anticipating the reduced output from shut down refineries?

The following refinery shutdowns were reported back in January by Dow Jones Newswire: Texas City, Texas. Port Arthur, Texas. Borger, Texas. Martinez, California.  Wilmington, California. Los Angeles, California. Carson, California. El Segundo, California. Richmond, California. (remember what I said about California fuel regulations? so many refineries down without being able to ship in more fuel from out-o-state)  Kapolei, Hawaii. Trainer, Pennsylvania.

Warning for Californians: Phillips 66 is considering selling off its two California refineries! They blame increasing regulation by the Golden State, which is driving up the costs of operations. Currently Phillips 66 is the only U.S. oil company with refineries in all 5 PADD areas.  British Petroleum (BP) is also selling off a California refinery, along with the ARCO brand and a refinery in Texas.

 

Business/Economics, Idaho, U.S.

What Economic Recovery? I warned you! U.S. gas & Diesel prices about to launch, weekly stockpile report shows supply shortage! Blame PADD 1 & 3! Western U.S. being made to pay for shortages in Eastern U.S.?

“‘This is ridiculous,’ said Criley, 55, who pulled into a Valero station off Hamilton Avenue in San Jose where gas was selling for $4.61 a gallon. A station attendant told him that he had just raised the price 20 cents five minutes earlier. ‘It had been holding at $3.99 for a couple of weeks. Now this. You betcha this hurts.'”-The Oakland Tribune, 04 October 2012

“Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs.”-Bloomberg, 04 October 2012

“The U.S. average retail price of regular gasoline decreased five cents last week…Prices decreased in all regions of the Nation except the Rocky Mountains….The national average diesel fuel price decreased a nickel…”-U.S. Energy Information Agency, 26 September 2012

So, in September average retail fuel prices slightly decreased.  In some places, like Idaho, per gallon Diesel (distillate fuel oil, DSO) prices held almost steady while gasoline went down a piddly few cents.  Now prices are already going back up.

Do not blame the gas station operators!!!  I managed a gas station in Santa Maria, California, decades ago, and I can tell you the profit margin is just too small at the retail level.  In fact, the current situation in California is shutting down family owned gas stations: “Gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”-Sam Krikorian, owner Quality Auto Repair in North Hollywood

A Montana based petroleum industry analysts agrees: “The mom and pop gas stations are having to close down from either not being able to obtain gasoline from their regular distributor or cannot afford the break-even price of almost $5 per gallon!”-Bob van der Valk

Back at the beginning of September I warned of higher fuel prices for October.  This was based on the futures (commodity) prices of fuel, which are usually four weeks out. I basically warned that on 12 October 2012, DSO fuel prices could hit around $5.15 per gallon!

I also explained that fuel prices in the Petroleum Administration for Defense Districts (PADD) 5 area (Alaska, Arizona, California, Hawaii, Nevada, Oregon, Washington) was being hit by fuel refinery shut downs, for reasons known and unknown (and so is the rest of the country).  It looks like that situation has not changed, and might actually be worse on the east coast and along the Gulf of Mexico!

Several media sources are reporting that California fuel refiners are actually rationing out fuel!   The result is that gasoline is reported to have jumped by a full dollar in one week in some parts of the Los Angeles area!

Phillips 66 is shutting down two California refineries for maintenance.  A Chevron pipeline was shut down because of contamination.  On 01 October, a ExxonMobil refinery was shut down because of a power outage. And according to a Bloomberg report, the narcissistic environmental policies created by California politicians/environmentalists have made it impossible to import fuels from outside California!

So don’t blame Obama!  Obama has allowed the opening of more oil fields than any other U.S. President (a true oil man)!!! It’s the fault of the oil companies and fuel refiners, and stupid laws in California!  And that’s the real crux for the drivers in California, the stupid laws!

Even though California is part of PADD 5, their fuel refining laws are so strict that fuel made outside California, yet still within PADD 5, can not be sold inside California!!!

Oh, and the prices Californians are seeing now don’t even reflect what the gas station owners are paying: “Really, since the Chevron Richmond fire, inventories have been tight. As other refinery problems occur, there isn’t much or any available inventory. Retailers are not yet reflecting the wholesale price increases they have experienced...”-Tom Robinson, Robinson Oil

How about PADD 4 (Colorado, Idaho, Montana, Utah, Wyoming)?

Phillips 66, Pocatello, Idaho, 04 October 2012.

According to the U.S. Energy Information Agency, the current average retail price for PADD 4 area DSO is $4.20 per gallon.  If you notice in the pics I posted, here in Bannock County, Idaho, diesel prices range from $4.30 to $4.40 per gallon, at the cheap fuel stations.

CommonCents, Chubbuck, Idaho, 04 October 2012.

For regular octane gasoline, USEIA says the average PADD 4 area retail price is $3.76 per gallon.  My pics show that where I live it’s at least $3.82-$3.84 per gallon.

Padd 4 fuel stockpiles have been stable for all types of gasoline, around 6 million barrels, that’s according to 28 September 2012 data.  All types of DSO, in PADD 4 area, has a stockpile of about 3 million barrels, steady for the past four weeks.  So stockpile issues do not explain why prices in Idaho are higher than the PADD 4 average.

It’s not production issues either.  PADD 4 production has gone up.  DSO production at the end of September was averaged at 0.174 millions of barrels per day (mbpd).  Last year it was 0.156 mbpd.

PADD 4 gasoline production ended September with an average of 0.296 mbpd. At the same time last year it was 0.254 mbpd.

In fact, even in the troubled PADD 5 area, USEIA data shows stockpiles and production hasn’t changed that much in the past four weeks.  (stockpiles of DSO in PADD 5 have actually gone up in the past two months!)

Is it demand?  Nope.  According to USEIA, overall demand for fuel in the United States has gone down slightly since last year!

Average demand for gasoline was at 8.6 mbpd at the end of September, last year it was 8.9 mbpd.  For DSO the average demand was at 3.6 mbpd, compared to last year’s 3.8 mbpd.

The USEIA reported that at the end of September, for the country as a whole, raw oil stockpiles were down by 500,000 barrels.  The ‘expert’ media analysts had expected an increase of 1.5 million barrels!  Overall stockpiles of gasoline went up by 100,000 barrels.  The big loser is DSO, with stockpiles falling by 3.7 million barrels!!!  The net result being an overall reduction in petroleum supplies!

Well, if stockpiles and production are steady or actually up in PADD 4 & 5 areas, and demand is slightly down for the country, then why would overall supplies be low?

Blame PADD 1 and 3!  Stockpiles and production are crashing on the east coast and in the Gulf states!

At the end of September PADD 1 had 41.1 million barrels of DSO, a 20 million barrel drop from last year’s 61.5 million!  Gasoline is at 46.1 million barrels, compared to last year’s 55.3 million barrels!

PADD 3 ended September with 67.4 million barrels of gasoline, last year they had 74.9 million!  DSO saw a huge drop, from 50.8 million barrels last year to 37.4 million barrels at the end of September this year!

For such a big drop in stockpiles, PADD 3 averaged DSO production is unchanged from last year, at 2.4 mbpd.   PADD 1 DSO production average is down slightly from 0.4 mbpd last year to 0.38 this year.

The same can be said of PADD 1 gasoline production; 2.8 mbpd this year versus 2.9 mbpd last year.  Average gasoline production for PADD 3 ended September at 1.8 mbpd, last year it was at 2.1 mbpd, so a big drop there.

This begs the question: Is the western half of the United States being made to pay for shortages that should only be affecting the eastern half of the country?

“I see no reason for this at all. Sounds like a load of rubbish to me!”-Errol Emrich, pissed off California driver

PS: Wholsale/futures/commodity prices for refined fuels ended September 2012 higher.  So expect even higher prices at the pump next month!  Wish the U.S. petroleum industry a Happy Thanksgiving!

Business/Economics, International, U.S.

What Economic Recovery? Global demand & decreased U.S. production could result in sky high Diesel fuel prices!

“The government does not want to tell the truth in the Parliament. It wants to run away from the coalgate scam [a reference to a political scam involving coal allocations in India] and wants to evade the issue of corruption by raising the fuel price….Once the session is adjourned, government and the oil marketing companies will go for another hike in the price of diesel, petroleum, and other petroleum products and it has become a routine for the Congress….”-Prakash Javadekar, Bharatiya Janata political party in India

In the United States, as of 05 September 2012, the contract price for New York Ultra Low Sulfur Diesel (ULSD) was at $3.15 USD per gallon for delivery on 12 October 2012.  That can be considered the wholesale price before it gets to the gas station.  You can add another one or two dollars, plus taxes, retail at the pump in October.

The 05 September contract is not as high as the peak in March 2012, that hit $3.30, wholesale.  The 2012 low contract price for ULSD was in June, at $2.70 per gallon, but it’s been rolling back uphill ever since.

Near Lava Hot Springs, Idaho, 07 September 2012.

In India, rising costs of Diesel and Kerosene are being blamed on inflation (usually caused by increased demand) and the increased costs of fuel production.  Most refiners in India are government owned, and they claim production costs have gone up 28%, and they want to pass it on to consumers.  There’s no detailed explanation as to why production costs are up, the most obvious reason is that crude oil prices have gone up (it accounts for 60% of refining costs in the United States).

New Zealanders are complaining, even though their fuel prices have come down since they hit record levels in May (for gasoline) and July (for Diesel).  The problem is New Zealand imports its fuel.

More people, outside the U.S., use Diesel because it is more efficient than gasoline (petrol), thus part of the reason for the increased demand globally.  But in the United States, emission laws, and a bad stigma, has Diesel relegated mainly to the transportation industry, with relatively few personal vehicles running on Diesel.  Just think what would happen if tens of thousands more people in the U.S. started driving clean burning Diesel powered cars that get 50 miles per gallon?

But what about supply and demand here in the United States?

According to a report by Institute for Supply Management Non-Manufacturing Business Survey Committee, August commodity prices, and supply levels, are not consistent with supply and demand.

The report says fuel prices are up, but supply is not down!  It stated that Diesel 1 & 2, and gasoline up in price, yet “….no commodities reported in short supply.”

However, at the end of August 2012, California reported a 15% drop in CARB (California blend) Diesel inventories.  The result was that prices for CARB Diesel commodities traded in San Francisco hit highs not seen since 2007!  But that should affect only California, with their narcissistic environmental policies.

The main reason for the drop in California fuel supplies is blamed on refineries shutting down for maintenance.  However, the Golden Eagle refinery was shut down due to a failed compressor on a hydrodesulfurization unit.  Then there’s the Richmond refinery which has been closed for a month due to a fire.

The U.S. Energy Information Agency (USEIA) is reporting some interesting, and at first glance, conflicting data for the whole country, such as bio-Diesel production is way up.

From January to June 2012, 523 million gallons of bio-Diesel (From vegetation, by the way that’s what Rudolf Christian Karl Diesel intended his original Diesel engine to run on.) were produced.  That’s 158 million more than the same time in 2011.

However, the USEIA shows a drop in petroleum based Diesel fuel (No thanks to Rockefeller and Standard Oil, Rudolph Diesel was sued and lost the right of the use of his name for the peanut oil based fuel for his engine. Rockefeller & Standard Oil created a petroleum based fuel they called Diesel.) for the month of August.  Petroleum based Diesel fuel is now officially called Distillate Fuel Oil.

According to USEIA data released on 06 September 2012, for the week ending 31 August distillate fuel oil (DSO) production was at 4,341,000 bpd (barrels per day).  That’s down 326,000 bpd from the week prior, and down 287,000 bpd from the last week of July.

Also, in the “Product Supplied” category, DSO actually supplied at the end of August was down from the week prior, by 342,000 bpd.  It was down by 525,000 bpd compared to the last week of July.

So production, and product supplied, dropped at the end of August.  So at first we could say prices are up because supply is down.  But wait, there’s more!

While production is down, stock piles are up!  Stocks of DSO jumped from 124,265,000 barrels at the end of July to 127,076,000 barrels at the end of August, an increase of 2,811,000 barrels!

How can stocks go up if production went down?  Imports!

Imported DSO has been going up.  At the end of July imported DSO was at 62,000 bpd.  By the end of August it jumped to 135,000 bpd!

What this means is that despite a glut of oil available for refining into fuels, petroleum Diesel production within the United States is going down (for various reasons, most known only to the oil/refining companies), resulting in an increase reliance on more imported Diesel, and driving fuel speculators to bid higher on future deliveries of domestic Diesel fuels.

Keep your fingers crossed for the new Diesel refinery to be built near Williston, North Dakota!

Business/Economics, International, Technology, U.S.

Oil & Gas Prices: Disparity in fuel prices; Eastern U.S. vs Western U.S. It’s all about supply vs demand! Western U.S. fuel supply lowest since 1999! Expect U.S. fuel prices to drop in long run!

I was upset by a Memorial Day report on one of the mainstream U.S. national TV news programs, ’cause they reported gas prices down across the country!  Wait a minute, I live in the United States and gas prices actually went up where I live!

I noted that the mainstream media report focused only on the eastern half of the United States. I checked the internet for reports concerning the western half, and sure enough fuel prices have been going up here!

In the Pacific Northwest U.S. state of Idaho gas prices average $3.64 USD, according to the American Automobile Association (AAA).  But here in eastern Idaho it’s more like $3.77 per gallon.  In Mackay (pronounced Mac-Key), Idaho, it’s $3.90.

In the U.S. state of California prices are more than $4.00 per gallon. Gas prices have not come down in the past few weeks, even though oil prices have!

What’s going on? Why have fuel prices come down in the eastern half of the U.S. and, in some cases, actually gone up in the western half?

For one, the eastern half has a glut of oil, from the fields in the U.S. state of North Dakota, and from the northern country of Canada.  However, in recent months there was a lot of predictions that fuel prices would actually go up for the eastern half of the U.S., because several major refineries were being permanently shut down.

Two of those refineries are located in the U.S. state of Pennsylvania.  Fears of skyrocketing fuel prices turned to joy when it was revealed, towards the end of April, that Delta Airlines and Energy Transfer Partners will buy those refineries, and keep them up and running!

Also at the end of April, it was revealed that a new refinery, also in Pennsylvania, was up and running on the Delaware River!  It’s primary source of oil is shale oil from North Dakota and Texas.  This is important because it turns out that many of the older refineries can not handle refining shale oil.

Another important fact is that finally new oil pipelines are opening up, helping to get that bottlenecked glut of oil in North Dakota, and from Canada, down to refineries along the Gulf of Mexico, and to ports in Portland, Maine.

Finally, there was a recent report that a new diesel fuel refinery will be built near Williston, North Dakota!

So what’s happening in the western half of the U.S.?

On 22 May it was reported that U.S. oil supplies were at a 21 year high. However, when you look at refined gasoline and break it down between eastern and western U.S. you get a different picture, because you’ll see that having a lot of oil does not translate into having a lot of gasoline.

The very next day, 23 May, the U.S. Department of Energy (DOE) released a report which stated: “PADD 5 gasoline inventories at 24.1 million barrels on May 18, about 5.1 million barrels (17 percent) below typical levels for that date, the lowest for the region since March 1999.”

The DOE explained: “Abnormally low refinery runs on the West Coast since February tightened local gasoline markets, causing both wholesale and retail gasoline prices to rise.”

The DOE blamed reduced fuel supply to the western U.S. on that fact that several refineries were shut down for maintenance.  One of those refineries, British Petroleum’s Cherry Point, in the U.S. state of Washington, should be re-starting.

The DOE also explained that the western half of the U.S. sees higher fuel prices because of a lack of pipelines: “While unplanned refinery outages generally cause retail product prices to rise, the West Coast market is especially sensitive to such shutdowns. That is because the West Coast market is relatively isolated. Given the West Coast’s lack of significant pipeline connections to other markets and relative distance from the active physical trading markets….”

According to the DOE, it takes six weeks for any change in the price per barrel of oil plus any shortage or surplus of refined fuel, to be reflected in western U.S. fuel prices at the pump, but, if there are no further interruptions in western refinery operations prices should start coming down.

Business/Economics, International, U.S.

Oil & Gas Prices: Argentina raises prices, Quantas uses cooking oil to fuel planes, Sinopec looking to rival U.S. shale oil production

Daniel Cameron, Argentina’s Energy Secretary, is proposing to raise the price of Argentine oil exports to $63 per barrel.  Currently Argentina sells their oil at $42 per barrel.

Decades ago the Argentine government froze their export oil prices.  Now oil production is way down, because it’s not worth it to the Argentine oil companies.

To make the economic situation worse, Argentina imports most of its refined fuel, and that’s been going up, in price as well as volume.  Cameron wants to increase their export oil prices to offset the growing demand and cost of imported fuel, and to build up reserve funds in Argentina’s Central Bank.

The Australian airline Quantas, will be using a mix of kerosene based jet fuel, and used cooking oil.

Two of their airliners will be using the mixed fuel.  It’s being supplied by a Dutch company called SkyNRG.

Don’t be too concerned, the turbine (jet engine) is a glorified diesel engine.  In 1893 Rudolph Diesel designed the diesel engine specifically to run on peanut, or vegetable oil.  He succeed, however he was sued by Rockefeller’s Standard Oil.

Today’s diesel fuel is actually Petrodiesel, meaning fuel for diesel engines made from petroleum, not plant oils.

So, turbines and piston diesel engines should run fine on cooking oil, unless they were specifically made to run on Petrodiesel only (and don’t forget the bogus U.S. EPA rules that force you to use Petrodiesel in your diesel powered vehicle).

Virgin Airways Australia is also about to run their airliners on plant based fuels.  The fuel will be based on a type of Eucalyptus, called a Mallee tree in Western Australia.

China Petroleum and Chemical Corporation (Sinopec) will increase oil production and natural gas extraction.  This is partly because their profits dropped by 23% in their fourth business quarter.

The drop in profits came as corporate officials tried to shift from producing fuel, to buying fuel from other refiners.  Officials said Sinopec refining operations were actually costing more than refiners in other countries.

Sinopec is also exploring possible shale oil in western China, which could rival shale oil production in the United States.

 

 

Business/Economics, International, Technology, U.S.

Mazda builds clean burning Diesel powered CX-5 Crossover, better MPG than Hybrid SUVs. Don’t expect it for sale in NAZI environmentalist U.S.A.

Mazda has introduced a new clean burning diesel powered Crossover Utility Vehicle.  It’s powered by a 2.2 liter diesel, and gets 46 miles per gallon on the highway.  That’s better than current hybrid SUVs.

The new Mazda diesel CUV is smaller than most SUVs. It’s based on the Minagi concept crossover, and is also known as the CX-5.

Don’t look for it in the United States though, Mazda plans on selling it in Japan and Europe only (due to the unfriendly attitude towards diesel powered cars under U.S. emission laws, and the stigma many people in the U.S. still have about diesels).

Business/Economics, International, Technology, U.S.

Black Horse & Fuel Prices: United Kingdom to see record Diesel prices, not because of Iran oil embargo but because one of their refineries went bust!

…there before me was a black horse! Its rider was holding a pair of scales in his hand. Then I heard what sounded like a voice among the four living creatures, saying, “A quart of wheat for a day’s wages, and three quarts of barley for a day’s wages, and do not damage the oil and the wine!”

The International Monetary Fund (IMF) recently warned that a successful oil embargo against Iran could cause oil prices to jump by at least 30%.  But already Britons are being hit with record fuel prices, as fuel stations are running dry because a major oil refiner went bankrupt and stopped shipping out fuel!

In February, 2011, gasoline (petrol) prices in Britain hit at least $9.67 per gallon.  British media now reporting that diesel prices could pass 1.45 pounds per liter (that’s U.S.$8.60 per gallon), with the average diesel car, not truck, driver paying more than $156.00 for a fill up!

Back in 2010, diesel cars became the most popular vehicles in Britain, because diesel fuel was a little cheaper, per gallon, than gas. I say was, because in May, 2011, diesel fuel prices in the U.K. finally went higher than petrol.

Now, the giant Coryton fuel refinery in Essex, England, stopped fuel shipments on January 24, 2012.  Coryton’s Swiss parent company Petroplus filed for bankruptcy, as they fell victim to the ongoing credit crisis in Europe (you see capitalist corporations don’t operate with cash, they operate on loans, just like Mitt Romney).  13 banks, including Morgan Stanley, Deutsche Bank and BNP Paribas, froze Petroplus’s credit accounts (can someone please freeze the credit accounts of our capitalist leaders here in the U.S.?).

But just because they stopped shipping out fuel doesn’t mean they’re not making it.  In fact Coryton officials admit they’re now hording all the fuel they make: “Our immediate priority is to continue to operate the Coryton refinery and the Teesside oil storage business without disruption while the financial position is clarified and restructuring options are explored.”–Steven Pearson, joint administrator

Now throw in the fact that fuel tanker drivers are on strike at another British refinery.  That strike is blocking supplies from getting to 340 fuel stations in Britain.  By January 26, 2012, filling stations in Britain began reporting they were out of fuel, after customers rushed to fill their cars when news of the fuel supply stoppage was heard.

“There is no doubt the loss of supplies from a major U.K. refinery, plus the problems in Iran, is going to give the speculators a field day. When they speculate, the only way is up as far as  fuel prices are concerned. Motorists are going to have to get used to seeing prices creeping up.”–Edmund King, The Automobile Association

 

 

 

Business/Economics, International, Opinion, Technology

Government Incompetence: More than 80% of Japan’s nuclear reactors to be shut down, get ready for petroleum & coal prices to spike

Combine natural disasters, corporate and government incompetence, and regular inspections, and you end up with more than 80% of Japan’s nuclear power turned off.  That’s disastrous when you realize that Japan’s industries rely on nuclear power!  Can you say poor planning?

On November 25, another nuke plant will be shut down for regular inspection.  But that’s not all.  The remaining operating nuclear power plants will also be shut down going into spring 2012, because of the timing of scheduled inspections.  That means all 54 Japanese nuke plants will be off line!

This means there will be a huge demand coming from Japan for petroleum (oil, gasoline, diesel), natural gas and coal to run traditional electrical generators.  Now imagine what will happen to the price such commodities when an entire country suddenly starts sucking up millions of barrels of fuel per day!

Business/Economics, Idaho, U.S.

Occupy America! Diesel disparity in Idaho. Gas prices way down, Diesel way up. Blame increase in U.S. exports! Blame pricing games! Warning for California. Fracking really for fuel production. Grow your own!

In eastern  Idaho, the difference between the price of one gallon of regular gasoline, versus diesel, is now a full one dollar.

Phillips 66, next to the Bannock County court house, Pocatello, Idaho

On November 19, the average price, in the Pocatello/Chubbuck area, hit $3.18 per gallon for regular gasoline, and $4.18 for diesel.

The U.S. Energy Information Administration (USEIA) says gas prices are falling, in general, due to the usual seasonal drop in usage.  I’ve never seen it drop by this much, here in eastern Idaho.  Back in May, the average price was $3.65 per gallon, and it stayed that way through most of the summer.  In the past two or three months the price has dropped almost 60 cents.

The USEIA also says regional fuel refining has a lot to do with prices, but back in September I discovered that PADD 4 gasoline production was being kept below demand. The latest data on PADD 4 gas production shows that, after months of keeping it around 290 thousand barrels per day, regional refineries are now pushing out more than 324 thousand barrels per day.  This is why gas prices, in the Rocky Mountain area (PADD 4) are, or should be, dropping.

In California it’s a different story.  The latest gasoline price survey shows the average price around $3.54 per gallon, with many areas paying $3.79.  California taxes are one reason for the higher prices, but the other reason is that California refines its own fuel, and the refineries are in trouble.

According to the USEIA, despite having the third largest refinery industry in the country California’s refineries are maxed out, there’s just too many people driving too many vehicles.  The USEIA is warning of a fuel price catastrophe in California: “California refineries need to be running near full capacity to meet the State’s gasoline demand. If more than one of its refineries experiences operating problems at the same time, California’s gasoline supply may become very tight and prices can soar. Even when supplies can be obtained from some Gulf Coast and foreign refineries, they can take a relatively long time to arrive due to California’s substantial distance from those sources. The farther away the necessary relief supplies are, the higher and longer the price spike will be.”

Regarding the rising cost of diesel fuel, it looks like some of what I warned about back on November 5 is coming true.  Bottom line; around the world diesel production is down, while international demand is going up and up.

The latest reports on diesel commodity prices show a slight decrease.  The decrease is so small that the global increase in demand for diesel will still cause pump prices to go up.

And how does the global demand affect us here in the U.S.?  According to the American Petroleum Institute (API), most diesel fuel produced in the Untied States is actually being exported to other countries (a 37.6% increase, in both diesel and gasoline exports, in the past year).  That means less diesel for the domestic market.

Diesel fuel is part of the “distillates” family of fuels.  In the U.S. ultra low sulfur diesel is referred to as “Distillate Fuel Oil 15 ppm (parts per million) and under of Sulfur”.  According to USEIA records, ultra low sulfur production, in the United States, varies between 3.2 million and 3.6 million barrels per day.  Now realize that international demand has gone up, and that U.S. refineries are exporting much of their diesel.  Since overall production is remaining in the 3 million to 4 million barrels per day rang, that doesn’t leave much for us.  The result is diesel prices will continue to go up, until U.S. distillate refiners greatly increase production.

For those of us in the Rocky Mountain (PADD 4) area, the USEIA shows an up and down pattern for “Distillate Fuel Oil 15 ppm (parts per million) and under of Sulfur”.  From March through May, diesel production was stuck at about 160 thousand barrels per day.  By the end of July it increased to 195 thousand barrels per day.  Since the end of August it’s dropped, to 185 thousand.  That explains why diesel pump prices in the Rocky Mountain area are going up.

But here’s one more reason, and one that many diesel fuel users have speculated on; the high pump prices of diesel is an attempt by producers to make a bigger profit, since they’ve actually been keeping gasoline pump prices artificially low.  A Reuters article states just that: “This in turn crimps diesel output until the cost of the fuel gets high enough to offset losses from additional gasoline sales.”

The Reuters article explains, not very well, that ultra low sulfur refining requires hydrocracking, a process involving hydrogen.  It’s also used for gasoline.  The problem is that many refineries in the U.S. can not produce both diesel and gasoline.  This might explain the swings in production; one month gasoline production up, and diesel down, the next month it’s reversed.

The push for fracking natural gas, is actually for the fuel refining industry, because it turns out that using the hydrogen in natural gas is a good cheap way to conduct hydrocracking in fuel refining.

Eventually more diesel will be produced, because of the global demand.  Several companies in the Gulf Coast area have invested billions of dollars to build new refineries to extract the hydrogen from natural gas to hydrocrack new diesel fuel.

Diesel fuel users should really look into making their own biodiesel, even though you could get into trouble with the Federal and State tax collectors, as well as the EPA.  Here’s some links:  Backwoods Home Official BioDiesel Home BioDiesel Diesel Master JR Whipple (good for moonshine too, remember diesel is a distillate) There plenty more sites on the internet about making your own diesel, do the research.

 

Business/Economics, Idaho, U.S.

Occupy America: Gasoline vs Diesel prices, East Idaho gas prices drop while diesel remains the same. International demand means bad news for diesel users

As of November 5, 2011, some of the fuel stations in the Pocatello/Chubbuck area had dropped their gas prices to $3.29 per gallon.  Yet diesel prices remain unchanged, still between $3.99 & $4.09 per gallon.  Local gasoline prices had been falling steady for more than a week now, diesel has not.

fredmeyer november 5 2011

Fred Meyer, Pocatello, Idaho

According to indexmundi diesel commodity prices have been falling ever since prices peaked in July, 2011.  August saw a 5% drop, and September saw another 1% drop.  In September the average daily commodity (New York Harbor Ultra-Low Sulfur No 2 Diesel Spot) price for diesel was $2.98 per gallon.

phillips66

Phillips 66, near Kmart, Pocatello, Idaho

For those of you who continue to believe it has something to do with low sulfur refining, let me remind you that the commodity price is for already refined diesel.

Indexmundi also reports that refined gasoline commodity prices have been falling, also since their peak in July.  Gas (New York Harbor Conventional Gasoline Regular Spot) has actually been falling more then diesel: August saw a 6% drop, September a 2% drop.  The average daily commodity price for gasoline in September was $2.77.

Interestingly, The Associated Press reported in October that wholesale fuel prices went up, which contradicts the indexmundi web site.

Here’s the bad news for diesel users: When we look at the latest November commodity prices diesel has actually gone up; $3.06 as of November 1, versus gasoline commodity prices which were only $2.7o per gallon.

This might explain why diesel pump prices haven’t dropped, and why gasoline pump prices should continue to drop (unless you’re living in an area of the U.S. that’s actually seeing gas prices go up).  The latest diesel commodity prices also indicate that pump prices will probably go up.

In a quick survey of international news stories, it seems diesel prices are going up because of growing demand around the world.

In the Indian state of Manipur, an economic blockade has caused fuel prices to jump by four times, since the blockade started on August 1.  Basically there are people in Manipur that are seeking independence from India.

The Indian government controls the price of fuel in the country (it’s part of how the Indian government generates revenue for itself, and they’re hurting for more revenue), and is trying to hold off on raising diesel prices anymore: “It is always difficult to raise diesel prices as it is widely used by farm sector and industry for transportation. It is not perceived as a luxury fuel.”-Victor Shum, Purvin & Gertz.

On October 25, Reuters reported that China’s busy economy will drive diesel prices upward, and that fuel producers can’t keep up: “In the last 12 months China’s demand for diesel for power generation has been one of the major drivers (of the market). They do tend to step in and stockpile. We are not seeing any significant squeezes yet but this is a supply side story, if we carry on with this current trend we will have some problems in the light, sweet products.  I don’t believe supply can keep pace.“-Tony Hall, Duet Commodities Fund

Don’t forget that Japan has seen half its nuclear power plants shut down since the March 11 disasters.  Japan was almost totally dependent on nuclear power, now they are switching to other forms of generating electricity, and that includes diesel powered generators.

In South Korea demand for fuel, including diesel, has skyrocketed, and the government has approved the opening of 1,300 new fuel stations!  Ironically the South Korean government thinks by opening more fuel stations (thereby increasing demand) they can provide cheaper fuel: “Nonghyup and the KNOC [both government controlled companies] will jointly buy fuel from local refiners or from abroad, so they can be sold to the thrift gas stations. Prices will be kept down further by the gas stations operating on a self-service basis, where the driver fills his or her car.”-South Korean government statement

Another reason for an increase in diesel prices is that petroleum supplies are falling behind.

There is a problem with a refinery in Indeni, Zambia.  The refinery can not meet current standards of fuel refining, and needs U.S.$40 million to become compliant.

In Mexico, oil production has dropped.  In September oil production was 2.863 million barrels per day, the lowest levels since October 1995!

In fact around the world oil production dropped by 7% in September.  More specifically, diesel fuel production dropped by 12.7%!

In an earlier posting I explained how decreased gasoline production was the real reason for gas pump prices going up, now it’s diesel.

Like I said, bad news for diesel fuel users.