We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.
Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.
We are going to have to import more of our oil. Period.
Joined: Oct 23, 2004 Posts: 5069 Location: New Jersey
Posted: Sat Mar 15, 2008 11:43 am Post subject: Re: Record Diesel engine fuels price thread.
sjn wrote:
Are we seeing the first chronic shortages to hit the OECD? Diesel consumption has been growing much faster than petrol/gas in recent years and makes up a smaller fraction of refinery output. Gas typically gets more press because it's the most used fuel for American drivers, but it is diesel that really provides the life-blood of the transportation (and agro) economy.
Today's situation can technically not be called a shortage in OECD countries, but in non-OECD countries we have widespread reports of shortages in poorer countries. Regular readers here will understand that the effects of PO and product shortages will hit the poorer countries first, as they are least able to afford the high price of oil.
However a bidding war for diesel has already started. After US inventories were drained by an unusual amount of diesel exports to northwest Europe in February and early March, critically low supplies of diesel in the US - accelerated by low refinery utilization - have caused the US in last week to reverse the export flow of diesel back to the US. This can be seen by the dramatic move higher in the price of diesel these last two weeks.
America runs on diesel, and supply shortages would be devastating to the economy.
Joined: Dec 02, 2005 Posts: 6149 Location: Oil-addicted Southern Californucopia
Posted: Sat Mar 15, 2008 11:47 am Post subject: Re: Record Diesel engine fuels price thread.
sjn wrote:
Are we seeing the first chronic shortages to hit the OECD?
It's starting to look that way, isn't it? We assumed the first shortages would be for gasoline, but we may have a nasty surprise in store for us in the very near future.
If the trucks can't get enough fuel, things are going to go to Hell in a wheelbarrow with astonishing speed. _________________ "Thank you for attending the oil age. We're going to scrape what we can out of these tar pits in Alberta and then shut down the machines and turn out the lights. Goodnight." - seldom_seen
Joined: May 10, 2007 Posts: 2263 Location: napping on the couch
Posted: Sat Mar 15, 2008 1:09 pm Post subject: Re: Record Diesel engine fuels price thread.
So I was just thinking about what would be prioritized in the case of a shortage of diesel. Processed and fresh foods. A brief tour of google tells me that many of the food processors are located in the midwest, often in small towns, close to the raw materials but far away from the largest markets (makes sense given that it is easier to ship the frozen pizza than the live hog).
That makes me wonder if it would not be the port cities that would be hurt first. Sure there would still be plenty of Argentinian beef to ship but would we prioritize the plastic imports from china or the textiles from Vietnam?
One question I would have, "At what price would I be able to fill up my VW TDI that I have been patting myself on the back for buying the last three years? _________________ The sage experiences without abstraction,
And accomplishes without action;
He accepts the ebb and flow of things,
Nurtures them, but does not own them,
And lives, but does not dwell.
-Lao Tzu
Joined: Nov 18, 2004 Posts: 971 Location: Central Texas
Posted: Sat Mar 15, 2008 1:22 pm Post subject: Re: Record Diesel engine fuels price thread.
I was expecting delivery of two 1,550 gal water tanks today and when I called the vendor to ask about the status of the delivery--get this--was told the shipping company in OK was negotiating a new diesel fuel surcharge contract. The new contract would not affect my purchase, but future deliveries will apparently cost a lot more to the vendors in Central Texas. Meanwhile, shipments are on hold...
The water tanks are made in Oklahoma and the vendor I use now is experiencing over a seven week delay. _________________
Posted: Sat Mar 15, 2008 2:32 pm Post subject: Re: Record Diesel engine fuels price thread.
PeakOiler, if you don't mind - what kind of tank is it - galvanized or polyvinyl? My dad up in OK is looking for a galvanized vendor. _________________ “I'm completely in favor of the separation of Church and State. My idea is that these two institutions screw us up enough on their own, so both of them together is certain death.” George Carlin
Joined: Nov 18, 2004 Posts: 971 Location: Central Texas
Posted: Sat Mar 15, 2008 2:59 pm Post subject: Re: Record Diesel engine fuels price thread.
emersonbiggins wrote:
PeakOiler, if you don't mind - what kind of tank is it - galvanized or polyvinyl? My dad up in OK is looking for a galvanized vendor.
Hey EB,
The tanks I'm getting are HDPE, (high density polyethylene), currently made from crude oil. Ethylene, however, is also a by-product of rotting tomatoes.
Q: How many tomatoes would it take to manufacture a 1,550 gal HDPE tank? hmmm. Don't forget about the organo-metallic catalysts to make HDPE either, e.g, trimethyl aluminum, or silmilar pyrophoric derivatives.
As far as metal tanks are concerned, you'll have to search the web for those vendors. I have no personal experience with metal tanks. Some links are in the PFTF forum in the Rainwater Collection thread for various vendors of water tanks. _________________
Posted: Sat Mar 15, 2008 3:14 pm Post subject: Re: Record Diesel engine fuels price thread.
Diesel prices across Southern Manitoba Canada have risen to $1.23 a litre. There is 3.78541178 litres to a U.S. gallon, so thats $4.66 CAD per U.S. gallon. Converting Canadian dollars into U.S. dollars at 1.0112 exchange rate, that's $4.61 U.S. dollars for a gallon of diesel fuel here today.
That's a 10 cent jump per litre or 37.85 cent per gallon jump since yesterday.
Just waiting for gasoline to follow suit tomorrow.
Joined: Oct 23, 2004 Posts: 5069 Location: New Jersey
Posted: Sun Mar 16, 2008 8:17 am Post subject: Re: Record Diesel engine fuels price thread.
Diesel prices at some local stations have jumped 30 cents/gallon in one day - which I think is the most ever in one day for either gasoline or diesel.
Although I missed this the other day, demand for diesel from Chinindia remains extremely strong:
Quote:
India's IOC may double diesel imports in 2008/09
Mon Mar 10, 2008 6:22am EDT
NEW DELHI, March 10 (Reuters) - State-run Indian Oil Corp (IOC.BO: Quote, Profile, Research) may double its diesel imports to one million tonnes in the next financial year if domestic demand continues to grow strongly, its director of finance said on Monday.
India's diesel consumption grew an annual 10.5 percent during the first 10 months of the fiscal year to end-March and surged nearly 16 in January from the same month a year ago.
India meets 70 percent of its oil needs through imports.
Posted: Sun Mar 16, 2008 8:37 am Post subject: Re: Record Diesel engine fuels price thread.
DantesPeak wrote:
sjn wrote:
Are we seeing the first chronic shortages to hit the OECD? Diesel consumption has been growing much faster than petrol/gas in recent years and makes up a smaller fraction of refinery output. Gas typically gets more press because it's the most used fuel for American drivers, but it is diesel that really provides the life-blood of the transportation (and agro) economy.
Today's situation can technically not be called a shortage in OECD countries, but in non-OECD countries we have widespread reports of shortages in poorer countries. Regular readers here will understand that the effects of PO and product shortages will hit the poorer countries first, as they are least able to afford the high price of oil.
I slightly disagree. The same process occurs internally within countries too, even in the OECD rising costs force individuals and certain commercial operators out of the market. The "free-market" helps prevent accute outages by rationing by price, but this results in the curtailment of normal economic activities that become no longer economic.
Quote:
However a bidding war for diesel has already started. After US inventories were drained by an unusual amount of diesel exports to northwest Europe in February and early March, critically low supplies of diesel in the US - accelerated by low refinery utilization - have caused the US in last week to reverse the export flow of diesel back to the US. This can be seen by the dramatic move higher in the price of diesel these last two weeks.
America runs on diesel, and supply shortages would be devastating to the economy.
If it is no longer economic to truck goods to WalMart, the empty shelves will be devastating even before there are widespread outages due to the system sputtering as inventries fall below MOL. It all depends on whether prices rise fast enough to keep the system operating, and whether there is the slack to shift the costs to the consumer or else goverment intervention in the form of explict rationing or subsidies to keep the trucks running.
Posted: Sun Mar 16, 2008 9:01 am Post subject: Re: Record Diesel engine fuels price thread.
sjn said:
Quote:
If it is no longer economic to truck goods to WalMart, the empty shelves will be devastating even before there are widespread outages due to the system sputtering as inventries fall below MOL. It all depends on whether prices rise fast enough to keep the system operating, and whether there is the slack to shift the costs to the consumer or else goverment intervention in the form of explict rationing or subsidies to keep the trucks running.
It doesn’t look like government intervention would effective or even possible. The wheels are grinding to a halt on every front. The banking system is in systemic self destruct mode, trucking firms are going out of business by the train load, and the consumer is tanking by the minute. This relationship is not a simple linear X happens because Y happened event. It looks to be more like a Chaos Theory event, where everything falls apart at once.
If that is what happens, there will be no fixing it! I have suspected for quite a while that PO is not compatible with our present economic/financial system.
Posted: Sun Mar 16, 2008 9:16 am Post subject: Re: Record Diesel engine fuels price thread.
shortonoil wrote:
sjn said:
Quote:
If it is no longer economic to truck goods to WalMart, the empty shelves will be devastating even before there are widespread outages due to the system sputtering as inventries fall below MOL. It all depends on whether prices rise fast enough to keep the system operating, and whether there is the slack to shift the costs to the consumer or else goverment intervention in the form of explict rationing or subsidies to keep the trucks running.
It doesn’t look like government intervention would effective or even possible. The wheels are grinding to a halt on every front. The banking system is in systemic self destruct mode, trucking firms are going out of business by the train load, and the consumer is tanking by the minute. This relationship is not a simple linear X happens because Y happened event. It looks to be more like a Chaos Theory event, where everything falls apart at once.
If that is what happens, there will be no fixing it! I have suspected for quite a while that PO is not compatible with our present economic/financial system.
Yes, I agree. I never meant to imply that it was actually possible, it is just what would be necessary.
Joined: Apr 05, 2005 Posts: 1538 Location: Springsteen Country (NJ)
Posted: Sun Mar 16, 2008 8:34 pm Post subject: Re: Record Diesel engine fuels price thread.
I was just in Staten Island, NYC and diesel there is $4.80/gallon. _________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
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