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14 comments on A gentle reminder

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jmengel on October 20, 2005 - 12:21am Permalink | Subthread | Comments top
Here in central Illinois, it appears if the IEA is not loaning much in the way of diesel.  The price as of this morning at the station I pass on my way to work was $3.649.  However, the average price reported on the DOE website is $3.144.

While gasoline stocks seem to be leveling off, the charts at This Week in Petroleum show distillate (diesel) stocks continuing to drop.  Seems as if we are working hard to keep the average consumer placated with stable gasoline at the expense of other petroleum products.  The curves for distillates (diesel) show a plunge in US production this fall (25% in 2005 versus 8% in 2004) and US stocks, but with a 10% drop in distillate imports compared to this time last year which contrasts with the nearly 100% increase in US imports of gasoline.

What is going to be the impact of this?  If US stocks, imports, and production of distillates continue to drop, will it be a cold winter for heating oil?  How about tractor-trailer freight costs?  As I recall, the switch to low-sulfur diesel is a year away.

-Jon

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ab3 on October 20, 2005 - 4:52am Permalink | Subthread | Parent | Comments top
Diesel is definitely the soft spot in our fuel dependency. Robert Bryce had an article about it on Salon.com last week (10/11/05) in which he discussed the reasons for diesel being in worse shape than gasoline.

The Europeans can lend us gasoline much easier than diesel because they have more slack in that market. Also, the new diesel regulations go into effect next June and require refiners to reduce the sulfur content from 500 ppm to 15 ppm. The pipeline companies, however, are going to limit the diesel they ship to 6 or 8 ppm because every time it moves from one tank or pipeline to another, it gains sulfur.

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Glenn on October 20, 2005 - 7:28am Permalink | Subthread | Parent | Comments top
Somehow I doubt that the sulphur regs are going to take effect if diesel is still over $3/gallon. "We can't afford to be good for the environment" they will scream. And the self-reinforcing cycles of oil dependence and climate change continue....
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bhyde on October 20, 2005 - 1:04pm Permalink | Subthread | Parent | Comments top
That is mostly a political question.  I've been thinking that if I was Damlier-Chysler I'd be very concerned about this.  The only fuel efficent card in their deck are the efficent European diesels.  So they, at least, should be one member of the oligarchy arguing for low sulphur.  The trucking industry, on the otherhand, is in a lot of pain.  Pain today is a very powerful political motivator.

I don't know if this is a technical question; if the refineries have already made the costly production commitments they may prefer for the regs to go into effect.

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ericy on October 20, 2005 - 8:13am Permalink | Subthread | Parent | Comments top

You are probably right here - I have been seeing the spread between diesel and RUL growing in recent days.  Right now diesel is $3.19 - RUL is $2.79.

I hear rumors that the introduction of ULSD will be delayed, but nobody can find out anything concrete.  I have a friend who is a reporter for a trade rag for truckers, and she was getting quite frustrated with the EPA because she couldn't get a straight answer about this from them.

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DonRobbie on October 20, 2005 - 12:26pm Permalink | Subthread | Parent | Comments top
The problem is the EPA has new regulations for heavy truck emissions coming online for the 2007 model year (which means May 2006). The Particulate filters and catalysts for the 07 engines require ULSD or else they will be fouled. At this point there is not any certainty to what happens to the warranty for one of these engines ($15k+) if non ULSD is used in it.

SO to bail on the ULSD requirement would also require bailing on truck emissions (after 5 years of R&D and the start of a changeover in production). Even if the new requirements go forward mixed availability of ULSD would be another reason for fleets to hold off on the new technology (already there is a massive pre buy going on with fleets loading up on new trucks this year so they do not have to buy new trucks until the tech is proven for a year or two)

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Dan Ur on October 21, 2005 - 12:19am Permalink | Subthread | Parent | Comments top
On a side note to all this, If the price of the Trucking Fuel stays high all our prices will go up.  Trucking companies Last year ate some of the Costs that Diesel imposed on them.  Well the prices went back up and have stayed up, so they have been passing their costs along to their customers.  

Retail, and Wholesale almost always get their "stuff" from a trucker.  You and I might be able to smile as we fill up the family Automobile as the prices go down a nickel or dime, but we see the costs when we go to buy the food we eat and the clothes we wear.  I have seen prices go up a penny here or there and up for businesses that I have contact with, so that cost of that gallon of diesel is not just going poof.  We are still paying for it.

If the price of diesel stays up, up will go inflation, even if they try to hide the numbers.

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