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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 just denied for 2 years until we get rid of these nut bags. Most farm equipment runs on diesel, most construction equipment runs on diesel, virtually all mining equipment runs on diesel, our entire supply chain is fueled by diesel including container ships, trains, and trunks. There aren’t any real replacements for these right now. The electric trucks coming on line only have about a 300 mile range, so they might be useful for the last link in the supply chain but not any of the others. Also places like hospitals normally have backup generators that run on diesel. All of that would have to be replaced with a different technology to move away from diesel. I don’t know that the technology to do any of that exists right now.
I have heard that we are importing diesel from Italy. Or should I say diesel from Russia imported through Italy, but it comes up as Italian diesel. Heard it on the radio from a commodities trader, whatever that’s worth.
Maybe somewhere, but one would have to search long and hard.
Do you know when it started making the trip?
Somehow it’s cheaper to sell and ship our diesel to Europe and then we import diesel from Italy?
Naw.
Actually makes sense because of the Jones act it is prohibitively expensive to ship between Houston and Boston, and we don’t have the pipelines we should to be able to ship that way.
But there are pipelines, and supposedly fuel is already on the way to the Northeast, although perhaps not Boston specifically. Or do you mean there should be more pipeline capacity than currently exists?
There should be more pipelines than currently exist. We should also repeal the Jones act. I was just pointing out how it might be cheaper to ship oil to Europe than it is to ship it inside America or from one American port to another.
SAY IT LOUDER UNTIL THE HALF-WITS IN WASHINGTON CAN HEAR US!
Me too. The only thing worse than a talking head video is a talking head plus waving hands. Videos with faintly-relevant stock backgrounds are almost as bad.
Well, with this definition stupid just devolves into wrong. Maybe due to false presuppositions about the nature of reality, but still just wrong.
No, I can be wrong without being stupid, if I’m correctable.
Think of stupidity as willful, intentional blindness to some part of reality. Smart people are much better at doing it than dumb people. That’s because it’s a skill, an ability which improves with practice.
In this era, coal looks pretty good if you ask me. Inflation. Unfunded liabilities. Supply chain problems. Global chaos. Demographic problems.
I get that it’s the least clean option, but we make decisions like this all of the time, like how safe cars are going to be. If they really studied it, it could be the best form of energy considering everything.
The other thing is the logistics are so easy. You stick it on a train and then you pile it up at the power station. Compare that to natural gas. I would assume it’s less complicated than uranium even though uranium is basically stuck in a shoebox at the plant. Then you avoid all those problems they had in Texas a couple years ago. Then throw in the terrorism angle.
I agree. He’s the favorite interviewer of one of the hedge fun guys I follow.
Power plants are going to have some local storage for natural gas too, but not as much as coal.
What is to be done?
Problems with coal are sulfur, heavy metals, mercury that are put into atmosphere when burned and contamination of ground water through storage and with ash. The ash itself is also a huge problem and pollutant of fresh waters. Then there are problems of mining and the highly acetic conditions created.
All of these problems can be addressed, but it costs money and should be part of a cost-benefit analysis.
Since the world has printed so much money, ruined all of their debt to GDP ratio’s, and have so many unfunded liabilities into a demographic catastrophe, I suggest they get on it.
Also, we need to bomb China to get them to stop putting up 80 coal plants a year.
Maybe we can finally cause global warming after all these years of attempting and failing.