This article is reposted from the excellent blog run by E. M. Smith, “Musings from the Cheefio”
Back about 9 June 2022 I put up a posting pointing out how central to the operation of our entire economy, technical society, and military, was a single fuel. Middle Distillate. AKA Kerosene, Diesel, Jet Fuel (and a few other names). All made from one “cut” of petroleum
There are differences between the particular fine grades of fuels. Jet-A is a kerosene with fewer “ring” compounds in it (less things with benzene type rings of 6 carbons) as they contribute to smoke at take-off (why in film from the ’60s & ’70s jets taking off had a lot of smoke and now they don’t; we changed from straight run kerosene to one with the rings opened). It also is more tightly controlled as to boiling point and when certain waxy heavier ends might start to solidify. Don’t want solidified waxy bits clogging up your jet engine at 40,000 feet and -50 F temperatures. Essentially it is a very narrow and somewhat cleaner, processed, strip in the middle of the Kerosene band or cut.
D1 or Winter Diesel is a kind of kerosene as well. Lighter than D2 (regular Diesel) but with very little attention paid to things like straight chain vs ring structure. It still has a very low temperature requirement for wax formation so it will work in Alaska in winter… But your lamp oil does not nor does the K1 kerosene for your garage heater. So you can get a variety of very detailed specific differences inside Kerosene. But it is still a kerosene cut. And still a middle distillate.
D2 Diesel Oil is a bit heavier (longer carbon chains) than D1 or K1 or Jet-A. It, too, is a middle distillate. Lately (last couple of decades) it has had the specification narrowed in The West to removed sulphur compounds for smog reduction reasons. It is still a Middle Distillate, just run through a sulphur removing step / process.
There are some other grades with other benefits or with reduced processing. Home Heating Oil doesn’t have as much processing / filtering or as tight a specification as D2; but is almost the same thing. Red Dye is added to it so that police can tell the difference and give you a ticket for running your Diesel engine on it (and not paying road taxes). The engine largely doesn’t care (especially for older Diesels that did not have computer controls and piezo-electric injectors with intolerance for any contamination in fuel that isn’t entirely clean).
Every winter, Diesel prices rise as Home Heating Oil demand sucks on the same Middle Distillate supply. Every summer, Diesel prices drop as there is low demand for home heating oil.
I mention this as it matters to the question of just which fuel is in short supply and may be rationed in the next few weeks or maybe months.
There’s a shortage of Diesel refining capacity at the moment, and our inventory is dropping fast. What I do not know is just which capacity is short. IFF it is just, for example, Diesel de-sulferizers, then it’s just Diesel that’s problematic. At the other far end, IF we are short of refineries that can crack heavy crude to make Middle Distillate from a sour-heavy crude supply, then all of the middle distillates will be hit. This is a Big “Dig Here!”
It is the difference between trucks & tractors being rationed, and rationing Planes, Trains, Ships, and military equipment fuel as well.
The problem is this:
Two weeks of Diesel inventory and slowly dropping on the East Coast. Now it IS being replenished at some rate, just not enough to keep up with demand drawing it down. So we won’t run dry in 2 weeks, but would if new supply were not arriving. This is another “Dig Here!”: When do we run dry at present consumption and supply rates?
EAST COAST INVENTORIES HAVE ONLY TWO WEEKS OF DIESEL SUPPLY
RUNNING ON EMPTY: America’s diesel stockpiles are rapidly dwindling, fuel rationing on the horizon
*American diesel stockpiles have been depleted while prices have surged to record highs, leading to higher prices for consumers.
*“I wouldn’t be surprised to see diesel being rationed on the East Coast this summer,” John Catsimatidis, the CEO of United Refining Co., told Bloomberg on Wednesday. “Right now inventories are low and we may see a shortage in coming months.”
*“What we’ve seen this year has been the capabilities to turn oil into diesel and gasoline and jet fuel have diminished,” Jacques Rousseau, a managing director at Clearview Energy Partners, told The Daily Caller News Foundation in an interview.
The U.S. stockpile of diesel fuel, which is vital for the transportation sector and economy at large, hit a nearly two-decade low as fuel prices hit a record high Wednesday.
That third bullet point makes it sound like a general refining capacity issue. Not just middle distillates. But that Gasoline supply is not as tight as Diesel.
Local gas stations are selling Diesel for just about $2 / gallon ABOVE gasoline. So, for example, gas at $3.40 / gallon and Diesel would be about $5.40 / gallon. This is a bit nuts, BTW, as usually Diesel runs about the same as mid-grade or premium gasoline.
IF the assertion that it is general refining capacity that’s the problem is in fact true: expect this to start hitting jet fuel inventories as well, and perhaps gasoline as the holiday driving binge hits.
Diesel, which has been characterized as the “lifeblood of the global economy,” is vital for the construction, mining and agriculture sectors. The transportation industry alone consumed 122 million gallons of diesel in 2020.
Basically, if it is big, heavy and moves; it runs on Diesel or Kerosene (Jet fuel). Farming, trucking, trains, planes, ships, barges being towed, fire trucks, mining equipment, tanks, troop carriers, jet fighters, harvesters, standby emergency generators at hospitals, etc.
Running out of Diesel & Jet fuel means the entire economy suddenly halts.
Now the “good bit” in all this is that we do still have refining going on and we are making more Diesel & Jet Fuel. Just not making it as fast as we are using it up, so inventory is dropping. This CAN be managed by reducing use to bring it into balance with supply. But that “has issues”…
Basically when you ration something, you must choose what is important and what is not. So which is more important?
1) Growing Food.
2) Moving Food to food processors.
3) Moving food from processors to stores.
4) Having folks with Diesel cars & pickups able to drive to the store to buy food.
5) Mining the minerals needed to build things (be it eCars, refinery parts, food hauling trucks..)
6) Moving parts made from those minerals to where the parts are needed.
7) Having a working military.
8) Having ships that can move manufactures goods to markets (from us or to us from China).
THE basic problem is that the folks who are using Diesel, here in America, are largely NOT passenger cars used for joy riding. Almost all our passenger cars are gasoline. Even the large number of Diesel Pickup Trucks are largely used in businesses of some kind (with some used for towing things like RVs or horse trailers… but not most.)
So pretty much it is a given that any rationing will mean SOME economic activity ends. The recreational / personal pleasure use of Diesel is nearly nil in comparison. So what economic activity ought to be ended, eh? Fire Trucks? Ambulances? Commercial Flying? Farming? Trains? Shipping on the seas or rivers? Shipping via trucks?
I’m pretty sure the Military will be held as first in line for fuel. Perhaps with a gentle nag to maybe not burn up too much of it in “training exercises”.
I’d expect ships to be 2nd in line, if for no other reason than that they often do (or at least can) burn heavier dirtier and a lot cheaper to make “bunker fuel oils”. (California mandates the use of very clean spec lighter fuel oils withing some miles of the coast – 50? – but the ships shift back to cheaper fuels off shore).
Third would most likely be Emergency Equipment. Fire departments, hospital standby generators, etc.
After that it starts to get a bit more murky…
Is it more important to grow grain, or to ship it via barge, or trains, or are trucks more important to get the grain to the pig farms, then the pigs to the processor and the bacon to the stores?
Break the link anywhere you still get no bacon.
Is it more important to stop folk flying around for Thanksgiving or Christmas, or to promote the flying and have them leave the cars at home? Ought we be encouraging folks to fly to Florida and leave their home oil heaters turned off up north? Do we prioritize that home heating oil over flying?
That’s the problem with rationing. A FREE & Fair Market is the best allocator we’ve found so far. The problem is that due to the heavy hand of Government, very few markets are truly free or fair anymore. “Regulation” distorts. Rationing distorts more.
Sidebar On Europe:
I’ve seen the assertion that we are sending a lot of our Diesel to Europe. Europe pissed on their oil supplier and now is having difficulty finding a replacement for Russian fuels. Europe has a much higher percentage of Diesel Cars than America, so for a very long time we’ve swapped some amount of Diesel for Gasoline. How much more Diesel are we sending over now due to Europe “sanctioning” their own fuel supplies?
Sidebar On Gang Green:
Gang Green & The Biden Crime Family (and the DNC Writ Large) have conspired to eliminate Petroleum Supply. Now if you were an oil refiner with an old refinery that was making a lot of Diesel Oil, and you had to do a bunch of repair / refurbishing (as is always the case since equipment wears out in use); you might be faced with many $Millions to do an upgrade that will pay you back over the next 25 years. Except you have been told you will be out of business in 10 years “to save the planet”. Do you do that upgrade, or do you just keep the plant running as long as possible on what you have invested already while you suck out as much of your sunk costs as possible?
The obvious answer is that you stop new investments and as old sections of plant reach end of life, you just shut them down. Over time the supply of refinery products drop as various bits of equipment break or wear out, but you can pocket the profit from what you can make and use that in some other business. This, after all, is what you were told to do by Gang Green & The Biden Crime Family rules.
NOBODY invests $Billions in a new Oil Refinery with a 40 year life span when you have been told your product will be illegal in 10 years. (Oh, and you are evil too… /snark;)
Sidebar On Oil Production:
All oil fields start off producing a lot, then the amount you get per year slowly declines. It takes a LOT of money to refurbish an oil field. CO2 injection, fracking (done since the Civil War Era…), drilling new and additional wells in old fields, steam injection, etc. All are very costly. Will you do a 20 or even 10 year pay-back enhancement of an oil field when you are being old you might be put out of business by fiat at any moment? When the pipelines to take that added oil to market are being shut down? Nope. Investment in drilling and enhancement stops, and you shift to the lowest cost, lowest staffing profile possible. You “run it into the ground” and take the money and run. It is the rational thing to do.
As soon as The Feds tell you no more leasing and we are shutting you down in 10 years, investments in making more oil halt and IMMEDIATELY the amount of oil coming to market starts to drop. At first, slowly, but with increasing speed as more oil fields need upgrade work that is no longer being done.
All of this is an absolutely clear and obvious consequence of the “Global Warming” and Gang Green policies being pushed by the DNC, Biden Crime Family, and Democrats / Progressives writ large. There is nothing at all that is a surprise here. (Well, not to people who can think or run a business) Yet somehow the folks in the District Of Criminals (Wash. DC) seem surprised. Go figure.
It is really pretty simple:
There is no way, at all, to replace all that Diesel and Jet Fuel powered equipment in anything less than about 40 years (if ever). For most of it, there is NO alternative equipment that works. You can not string power lines over the Pacific Ocean. Electrification of rail traffic works in very high density areas, but is incredibly expensive in the largely empty “Fly Over Country”. The quantity of copper that would be needed to electrify transportation is about 100 times the amount we can mine.
It simply can not be done.
So tell the oil industry to “go away in 10 years” and they will start doing that. Which will also mean that you can’t run your planes, trains, ships, military, emergency equipment, etc. etc.
The whole economy will grind to a halt.
The only question really is “Does that happen in year 9, or 8, or in 2 weeks?”