What is up with the diesel shortage?

[Boog]

On the news lately they report diesel fuel is down to a 25 day supply. That's just alarming considering how many trucks move supplies around this country. If we are teetering that close to an absolute outage during the warm summer/fall months, a hard cold winter storm could paralyze this country.
I don't know anything about refining, but it seems I remember diesel being easier, cheaper to produce than gasoline. I know there are different grades of oil used to produce different products. Also, I have read about some US refineries being phased out solely due to age and costs of upgrading. With continuing record profits, still aided by gov subsidizing (still about 50 cents per gallon?), why can't big oil reinvest in their refining operations keeping them at the top of the worldwide markets and keep a steady stream of fuel products for America and beyond? I read recently the US is the top oil producer in the world, and we consume the most oil in the world due to our population and development. Corporate greed explains a lot, but I believe most any successful business model includes properly maintaining it's mechanicals (I am so tired of hearing "infrastructure") and workforce with upgrades to keep them producing the most products and profits.
I know a few of you work in the oil industry and maybe can shed some light on the state of gas and diesel production in the US.
This is not a rant, but a search for the legitimate reasoning for fuel shortages here in the US beyond created shortages to hold up prices. Or is that it right there?

[Greg58]

As a patriotic American I have parked my Diesel for the winter.
Reality is I can't bring myself to burn fuel that costs $2 more per gallon!

[67swb72klb]

We run out of diesel things are going to get dicey real fast..

[Boog]

I've wanted a diesel pkup since the early 90s, back when diesel was still about the same $ or less than gas, but now I am glad I don't own one. A business can justify diesel trucks but I cannot for a daily driver.

[DeadheadNM]

We’ve had some refinery closures over the last couple of years reducing daily output coupled with increasing diesel exports particularly to Europe (https://www.bloomberg.com/news/artic...uverify%20wall) sapping our domestic stock. Low supply plus increased demand yields higher prices and equates to increased profits. The stoppage of war and reestablishment of disrupted supplies from the East would yield lower prices here at home I suspect.

[special-K]

Is it a 25 day supply or a 25 day reserve, meaning we are only keeping 25 days ahead of demand? Kind of means the same thing and is cause for concern. But calling it supply makes it sound like we'll be out of diesel in 25 days. I don't know much about it, but aren't we always adding to it as well? Among other reasons, such as Russia mucking things up, I'm sure with the beginning of the fuel oil season upon us and people buying all they can before it continues to go up (as it has been for years in winter) there has been a glut in heating oil sales. I know everyone on oil heat I talk to has made sure they topped off earlier this year and talk about what they saved.

Boog, I hear you. I bought my first diesel in the '80s and drove them up until '14. I went to diesel for the original reasons diesel engines exist: more torque, less maintenance, and less fuel consumption. When I bought a new one in '92, the fuel savings made at least half my payment. That sure has been changing since the consumer market got into diesels (I assume). I watched as the savings became questionable, then negated, and now more expensive like a luxury. I decided to get a gas vehicle last time and it has plenty of torque for me, hasn't needed much of any servicing, and I'm spending less on fuel in my gas guzzler. We talk about fuel being about $2 a gallon not long ago and now that is how much more diesel is than gas! How are the working Americans supposed to be able to absorb such an economic imbalance?

[Boog]

Exactly.

[72c20customcamper]

I still drive my Dodge CDT but In reality i never drove it all that much . Going to be 16 and is at 168k which was done mostly when i first bought it to pull the camper . I'm changing the oil this weekend I had the pan replaced last August and I put 2248 miles on it since .

[Dead Parrot]

Guessing but with the government pushing us into an EV economy, why would an oil company go through years of permitting and court fights plus construction costs to build a new refinery that may be rendered not needed if the EV thing happens?

Also, new laws on maritime fuel have put more demand on diesel stocks. Ships are being pushed away from the cheap high sulfur bunker fuel and toward lighter low sulfur fuels. These new fuels come from the same stock as diesel.

[DeadheadNM]

Apparently, we (the USA) just exported a record volume of oil and fuel abroad. We are just sending it away and as a consequence paying higher prices at home: https://www.bloomberg.com/news/artic...uverify%20wall

[Boog]

So, it's being sold to the highest bidder is what is happening. Export makes more money AND drives up our costs here. Win win for the oil companies.

[DeadheadNM]

Certainly the case with crude oil once the export restrictions were lifted by our government leaders in 2015:

“With U.S. crude oil production nearly doubling from 2009 to 2015, Congress repealed the crude oil export ban in December 2015—allowing the free export of U.S. crude oil worldwide.
We found that repealing the ban was associated with:[/I]
-Expanding the market for U.S. crude oil to overseas buyers
-Allowing producers to charge higher prices relative to comparable foreign oil
-Decreasing profit margins for petroleum refiners as they paid more for domestic crude oil relative to international prices
-Decreasing demand for U.S. tankers to move domestic oil, leading to declines in the U.S. shipping industry”

reference: https://www.gao.gov/products/gao-21-118

A cap or ban if re-implemented might drive domestic costs down.

[1976gmc20]

And I just bought a new diesel tractor. Actually, I "bought" it last April but I didn't get it until the end of September.

It doesn't use much, maybe a half gallon per hour. It only holds about ten gallons. I've got it full again plus a couple five gallon jugs of red #2 with some Power Service additive for plowing snow through the winter.

I'm not sure why we would get short of any fuel here? There are three refineries within 50 miles of us and there is a crude oil pipeline running right through my property!

[joedoh]

lots of diesel commuter cars here now too. used to be the oddball mercedes or vw, now almost every manufacturer has a diesel option for a car. some of them are better than the gas versions by a large margin, like the 55+mpg vw/audis.

I remember in the early 2000s, bmw had a 4 cyl diesel car that had more torque than the top of the line M model, they refused to sell it here because it would grenade their sport market. well that and the 5mil EPA "certification" to sell the new model here.

that and all the kids with their squatting diesel trucks. i bet all the coal rollers wish they could have all that wasted black smoke back now.

[Warrens69GMC]

We all can send them a message November 8.

[Sheepdip]

Originally Posted by warrens69gmc

we all can send them a message november 8.

bingo!!!

[LONGHAIR]

Originally Posted by Boog

On the news lately they report diesel fuel is down to a 25 day supply. That's just alarming considering how many trucks move supplies around this country. If we are teetering that close to an absolute outage during the warm summer/fall months, a hard cold winter storm could paralyze this country.
I don't know anything about refining, but it seems I remember diesel being easier, cheaper to produce than gasoline. I know there are different grades of oil used to produce different products. Also, I have read about some US refineries being phased out solely due to age and costs of upgrading. With continuing record profits, still aided by gov subsidizing (still about 50 cents per gallon?), why can't big oil reinvest in their refining operations keeping them at the top of the worldwide markets and keep a steady stream of fuel products for America and beyond? I read recently the US is the top oil producer in the world, and we consume the most oil in the world due to our population and development. Corporate greed explains a lot, but I believe most any successful business model includes properly maintaining it's mechanicals (I am so tired of hearing "infrastructure") and workforce with upgrades to keep them producing the most products and profits.
I know a few of you work in the oil industry and maybe can shed some light on the state of gas and diesel production in the US.
This is not a rant, but a search for the legitimate reasoning for fuel shortages here in the US beyond created shortages to hold up prices. Or is that it right there?

Sadly though, part of that "infrastructure" (agreed, much over-used term lately) is simply the people who run it.
Seems like every industry is hurting for people. It's really rough and seemingly worse in the last few years.
The cabinet shop where I work, is a prime example. They have always been in a hiring/searching mode, with the minor (very short) exception of late '08, when everything sucked. There is just no one out there who is willing to do this kind of work. It's not hard, especially in the last few years of tech and mechanical upgrades. Machines do a lot of the physical work that used to be part of it. In essence, they just need operators. It is more nuanced and skilled than that, but you just need someone who is willing to learn.
The things that I do are way out of that range, but I've spent the last 19 years doing it. This techy stuff is new to me, in the last few years, but very helpful. It has simplified and speeded up my workflow a lot.
Bringing someone into that is going to be quite the challenge, but they can't even get entry level people. It is not the pay either. I have heard what the starting wage is no-a-days and was rather shocked, especially considering where it was 10 years ago or so.

As far as the original topic, I'm not sure what to think. We, as a country, have so many self-inflicted wounds lately, that it's easy to believe that. There is also the "propaganda" messaging that could be artificially stirring the pot, when the "problem" is not as big as they would have us believe?

[special-K]

Originally Posted by Dead Parrot

Guessing but with the government pushing us into an EV economy, why would an oil company go through years of permitting and court fights plus construction costs to build a new refinery that may be rendered not needed if the EV thing happens?

That's a good point, but for now the fact is what refineries we already have (even with increases in demand with no new refineries in a long time) are able to provide more than the supply we need. Lack of new refineries is not causing this shortage.

[Boog]

And my point of maintaining and updating refineries doesn't mean doing something now that we are at this point, I mean why hasn't big oil been doing so all along? They've been reaping record profits for many years. It 'appears' they haven't been keeping their equipment up to par, by what I have read. They are shutting down some locations and cutting back on other's production. Is keeping up with the needs of the country not profitable?

[68panelman]

^^^ A short couple of years ago, we were the largest exported of oil, natural gas and the importing of lessor quality crude for refining and sending back to such foreign country. Our reserves of fuel were topped off when we were at the lowest barrel price of oil seen in decades. Everyone knows what the real deal is,..some choose to avoid the truth no matter how much it hurts, you can only bury your head in the sand for so long before coming up for air. As said above posts, We'll see come Tuesday...

[DeadheadNM]

Big oil lost billions of dollars in 2020: https://www.cbsnews.com/news/exxon-r...-history-2020/

Are refineries actually reaping record profits? I wonder what their losses have been like of late.

Industry crafted primer on economics of refining published this summer: https://www.afpm.org/newsroom/blog/r...rnings-are-why

[KW5413]

25-day supply of diesel doesn't mean we are going to run out in 25 days. It's currently a running 25-days. The norm is 60 days.

What I have not heard from any of the pundits bemoaning the impending diesel crisis is the fact that right about now is when are in the time slot for the refineries change over from summer grade to winter grade fuel.

With that said, I believe more LTL trucks are on the road than ever before. That doesn't count the additional heavy-duty pickups on the road bought by folks to pull their pandemic RVs that they aren't even using now.

[best view]

Or a scare tactic to get u into a uv

[davischevy]

I made a comment to my financial guy once about fat cat stockholders. He agreed that there are fat cats, but on a whole the majority of stockholders are, blue haired, retired, school teachers, blue collar workers, and the like, that have invested well in 401K's and retirement accounts.

If I were in the oil business, I would be hoarding every penny of profit I could right now. Look at the Keystone XL Pipeline. Those investors were cut off midstream with no possible way to retrieve their investment. Now even if that pipeline permit were opened back up, nobody is going to sink money in that hole.

To the question of subsidies. This is a long read, and six years old, but is still relevant. Some politicians would have you believe the taxpayers send oil companies money.
https://www.forbes.com/sites/drillin...h=7ac2c946e1cd

Why do oil companies charge so much for oil? Because we will pay it.

[DeadheadNM]

Customer before me at the diesel pump tonight had a hefty bill.