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Good Explanation of Diesel Fuel Shortage
Mark Moss provides a good explanation of why we have a diesel shortage. And why the problem is not going to be solved.
In case you have missed it, the supply of diesel is down to a 25-day supply. As Moss explains, that doesn’t mean we will run out in 25 days. It does mean that at the rate we are using diesel, the supply is 25 days. Diesel is being replenished, but that diesel is getting more and more expensive and likely the cushion will also decrease.
So what’s the problem?
Refineries are in short supply and the capacity was greatly reduced during the Covid pandemic. Many diesel refining companies went out of business. To bring even those refineries back online will be expensive (billions of dollars). Plus many of the refineries that went bust are old, prone to breakdown and inefficient. The payback period for new refineries is 15-20 years. But the Biden administration has declared that there will be no more diesel or petroleum by 2035. So there’s no possibility of paying back the investment. And even if the investment time horizon weren’t a problem, there would be an engineering problem because it takes five years to get new refineries up and running.
So why not import diesel? The spare capacity for diesel is in … Russia. So we have shot ourselves in the foot with sanctions.
The Biden administration’s solution is: Blame the oil companies. Of course.
Is there a more stupid group of people than the people in the Biden administration?
Published in General
No. Nor more arrogant. That is a deadly combination.
They are not stupid . They are determined and forth right in the nuts kicking of the nation.
Think , WEF and the gang.
Stupid? I’m convinced they know exactly what they’re doing.
So where does this situation leave us, HangOn? Now what?
How about the people who voted for them?
Especially if they thought Biden was “returning to normal.”
“We shut you down, but it’s your fault that you let us shut you down!”
They are the stupid ones.
I assume that refers to construction time for a new refinery, otherwise why would it take 5 years to restart a refinery that maybe shut down in a couple weeks or less?
That’s an excellent question, Susan. I would have said, more shipments by train – but guess what? Trains for the most part run on diesel.
So what will happen is the price of shipping will go up probably by a lot. No more free Amazon shipping. Pushing up prices is a way of reducing demand. At least for the next two years.
It is. I don’t think he gave a figure for bringing a refinery back online. I do remember the cost of doing so was astronomical.
As opposed to leaving it offline?
Just in time for Trump to come back and get things humming again!
Yes, and recouping the money and a profit.
So at some point the feds will probably take it over. Or maybe whatever states they happen to be in.
There really needs to be some severe punishment for these deliberate acts. At the polls.
Almost all freight rains run on diesel, but they use a lot less per ton-mile than do trucks…the ratio is something like 3:1 in favor of trains. So, theoretically, you should be able to save a lot of diesel fuel by shifting freight from road to rail.
There are problems with this alternative, though….many parts of the rail system are at or near capacity, being constrained by both track capacity and by personnel shortages.
And, for extra fun, a nationwide rail strike is still possible.
I recently read an article from 2015 that said at the time that 50% of eastern US petroleum refineries had been shut down.
This is by design
One of my favorite sayings: Never attribute to conspiracy anything that can be explained by incompetence.
I’d be leaning heavily toward incompetent conspirators, except that they told us what they intended to do. Before denying it.
Good video.
Hmm, Reagan might have fired them all, like with the Air Traffic Controllers.
Although I suppose they’re not federal employees.
Trump might have too.
Biden? No freakin’ way.
Calling Dagny Taggart!
Channeling Peter Robinson.
He lost me when he said “diesel gasoline” in the first few minutes. The US is actually producing more diesel than domestic consumption accounts for, however the spot price for diesel is higher in Europe than here so a BUNCH of US refined dieselis being shipped and sold in Europe. There is a more visible decline in stocks in the Northeast because it is cheaper to ship to Europe from Boston than from Houston. The YouTube channel “What’s Going on With Shipping” has a couple of informative videos on the subject…to include source material. Link to the most relevant episode:
Oh, I think in the courts, too.
But they’re still stupid. See, this is where the confusion over stupidity actually affects us. Stupidity is behavior, not a trait. They are not unintelligent. They are stupid.
I will take your word for it. I have a cranky personal rule against watching People Talking To Their Webcams Because They Lack Writing Skills. At least the OP provided a summary.
But this?
And so there will be no diesel or petroleum by 2035? Nobody can do anything about it? We can’t change our minds? Ever? An application today to build, restart, or expand a refinery will not merely be denied, it will be permanently denied?
I can sort of believe that. Obamacare can’t be repealed. Civil Rights Acts can’t be repealed. They just exist, invincibly.
The number to pay attention to is not the total number of refineries but the total capacity. As I understand it, smaller, olde, less profitable refineries have been shuttered but at the same time other larger refineries have expanded capacity. So the question is what is the total refining capacity now vs the total capacity 50-60 years ago. I would suspect more now as the requrirement for petroleum product has increased rather than declined and the refineries appear to be able to meet demand…more or less. The current “crisis” seems to be driven by energy speculators who are buying diesel here and selling it abroad. And as a mitigating factor there is a BUNCH of diesel in the pipelines on its way to the Northeast, it just will take a while to get there (product travels at around 5 mph in a pipeline and the travel time to the Northeast is 3(+) weeks from the Gulf coast refineries. Florida and Southeasten coast are not on the pipeline network and are mostly supplied by tanker from te refineries…
The USA has an incredible wealth of coal, oil, and gas. And we have the best industry to extract these resources and get them to market. It is criminal negligence to not exploit these resources.
So many “experts” have lied to us about global warming/climate change. This is criminal action – the deliberate attempt to bankrupt us and send us back to the Stone Age.
No argument here.
This is a dangerous time for America.