Diesel/Heating oil crisis
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Started by metmike - Nov. 18, 2022, 1:45 a.m.

Let's take a closer look at this real crisis which is one of the biggest contributing sources to the highest inflation in decades.

The price of diesel historically.

Other than during  a brief spike higher in 2008, the price of diesel has not been above $4 before this year.  The current price is well over $5 and double the average of the last 2 decades. 


The graph of the price of gasoline below looks very similar to the one above for diesel. However, this is extremely deceptive because of the graphing at the end. 

Note very similar pricing thru the period, with diesel even being the cheaper fuel by a bit at times. However, in 2022, a diesel shortage has developed because of a big drop in diesel inventories.  Local diesel prices here in Southwestern IN and in many places are $2.50/gallon higher than gasoline prices.



Why is this such a crisis?

Because the way we get our goods delivered is powered by diesel fuel. The higher the price, the higher the fuel cost for transport, which is added to the price of the products.

Freight Activity in the U.S Expected to Grow Fifty Percent by 2050


The point above is to show that the vast majority of goods/freight move  across the country by trucks and trains. 73% according to the pie chart above.

Trucks and trains burn diesel fuel  to power their movement across the country. Doubling the cost of transportation fuel, diesel is contributing greatly to inflation right now.

Elaboration in bold on the paragraph below:

INFLATION is much more than just excessive demand not being met with enough supply of goods. We have enough supply in many markets/products but the cost to move it across the country has soared higher and must be dialed into the price of products being sold in stores.

What is causing this?

Several things are contributing but the war on fossil fuels is by a wide margin, the greatest factor. 

More on this tomorrow, with a discussion that includes the role that the Biden administration played to make it much worse. 

By metmike - Nov. 18, 2022, 1:52 a.m.
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Heating oil supplies right now are the lowest in history for this time of year. This is bad news going into Winter/the heating season and leaves consumers in the Northeast that use heating oil to heat their homes at risk and will cause them to pay very high prices. 


How did this happen?

More on Friday.

By metmike - Nov. 18, 2022, 2:28 a.m.
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The Fed can increase interest rates all they want but with the diesel fuel market having extremely low inventory, diesel prices will stay well above previous record high levels and this will cause all transported goods to be much more expensive. 

Same thing with the heating oil shortage and the prices that consumers will pay in the Northeast to heat their homes this Winter.

This is a very expected result of the war on fossil fuels  and actually just a small sample of what’s to come for our country if we implement the schemes in the fake inflation reduction act…….exact same agenda as the climate bill but just renamed to trick people into thinking it will do the exact opposite of what it will really do……which is cause extremely high energy/fuel costs and fan the flames of inflation.

By metmike - Nov. 18, 2022, 11:27 a.m.
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The Country Is In The Middle Of A Diesel Crisis — And The Biden Admin Is Making It Worse, Experts Say



Jack McEvoy – Daily Caller News Foundation – on November 3, 2022


  • The Biden administration’s policies reduced diesel production and caused stockpiles to fall to dangerously low levels, experts told the DCNF.
  • “There’s an enormous tax and regulatory burden that the Biden administration has put on refining along with other industries,” Josh Young, chief investment officer and founder of energy investment firm Bison Interests, told the DCNF.
  • “At the moment refining capacity cannot meet demand, even when we have enough oil,” Institute For Energy Research Senior Vice President Dan Kish told the DCNF.


Take special note of this one:

Companies in the U.S. have also not built a major oil refinery in 50 years due to regulatory concerns and anticipation that the green transition will kill demand for fossil fuels.


Diesel demand recovered much faster than refiners anticipated, meaning that production has to catch up to meet demand, Institute For Energy Research Senior Vice President Dan Kish told the DCNF. The U.S. has lost more than one million barrels per day of refining capacity since 2020, according to the Energy Information Administration.

“At the moment refining capacity cannot meet demand, even when we have enough oil,” Kish said.

White House National Economic Council Director Brian Deese said on Oct. 19 that the administration is “very concerned” about diesel shortages, particularly in the northeast of the country, and indicated that the White House may limit or ban exports of refined petroleum products. The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, two industry groups, sent a letter to Energy Secretary Jennifer Granholm on Oct. 4 claiming that an export ban would exacerbate shortages.

 “An export ban would distort the market and essentially force refineries out of business which is the opposite of what is needed right now,” Young said.

The administration could also deploy the Northeast Home Heating Oil Reserve’s one million barrels of diesel to address shortages in New England. However, because diesel demand is so high, the reserve’s supply would last less than six hours, according to The Washington Post.

 Diesel inventories are in good shape when there are around 35 to 40 days of supply available; however, when there are just 30 days of supply left or fewer, problems can start to arise, according to Mansfield Energy. When there are only 25 days left of diesel supply, there is not enough fuel to keep industries operating if supplies are significantly disrupted, as fuel must be delivered via pipelines, meaning that vast quantities of fuel are days or weeks away from getting to where they need to be.

Diesel demand will further increase as cold weather approaches since 82% of households use diesel to heat their homes during the winter, according to the EIA.


Half of the refiners that closed were repurposed to use for renewables and/or were too expensive to operate because of governmental regulations/penalties intended to force them to close or repurpose for renewables(diesel made from soybeans, for instance)

Similar refineries for renewables get tax breaks, subsidies and support from the government making it an offer that some of them can't refuse because they are in the business to make a profit. 

By metmike - Nov. 18, 2022, 11:37 a.m.
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Turning Soybeans Into Diesel Fuel Is Costing Us Billions



This is a whole nother element to the discussion. Farmers/producers are just doing  a wonderful job growing huge crops for the markets. They face off the charts risks every year from uncertain weather and market conditions( for instance, crazy high input costs, right now because of the war on fossil fuels/fertilizer production ......or barge freight rates on the Mississippi to the GOM numerous times higher than before because of record low river levels.)

It's completely understandable when they are for anything that brings them a  reward for what they do to feed the world.............and in this case..... adding demand for fuels boosts the price and their income.  They are running a business. I would be the same way.

I'm stating that because of my personal environmental  position against biofuels. The vast majority of information that we get about biofuels is extremely distorted and reads more like propaganda but we have bigger things to worry about.

If the market wants to support this and producers are making more money, I won't squawk too much.

Putting up thousands of monstrous, bird and bat killing wind turbines that require tearing up the earth to mine for rare earth metals and that last 20-25 years is several orders of magnitude worse for the planet. ....to obtain diffuse, not dependable energy that doesn't hold a candle to fossil fuels.

Maybe we should say "doesn't hold a kW(Kilowatt) to fossil fuels)-:"

By metmike - Nov. 18, 2022, 12:24 p.m.
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This explains my NOT supporting biofuels. There's more to it than this. 

It's crony capitalism and politics(farm vote) with complete deception about the environmental impacts(including billions of gallons of water and tons of energy used at ethanol plants).

That's in addition to using food for fuel and the runoff of fertilizer/chemicals.

Nature and Environment

Are biofuels eco-friendly?

Industrialized countries have subsidized the use of biofuels in an effort to reduce greenhouse gas emissions. But campaigners say a focus on bio-based crops for fuel may actually be doing more harm than good.


Ethanol’s Contribution to a Record-Breaking Dead Zone in the Gulf of Mexico




Dead zone in the Gulf of Mexico.


Dead zones on the planet:



Red circles show the location and size of many dead zones.
Black dots show dead zones of unknown size.
The size and number of marine dead zones—areas where the deep water is so low in dissolved oxygen that sea creatures can't survive—have grown explosively in the past half-century.NASA Earth Observatory (2008)[1]

By metmike - Nov. 18, 2022, 12:57 p.m.
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The switch away from fossil fuels is one of the biggest reasons for inflation. 

Cheap, reliable and abundant fossil fuels are the life blood to almost every developed country's economy. 


By metmike - Nov. 18, 2022, 6:35 p.m.
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The ones renting their land to have the energy source from environmental hell (wind turbines) put up.....own the land and have the right to do with it what they want.

If it's crop land already, it's not that big of a deal.

In other countries,  where they are cutting down forests to put up wind turbine farms its environmental insanity!

Germany’s Forests Trashed to Make Way for Thousands of Giant Industrial Wind Turbines


Greens’ Destroying Germany’s Ancient Forests To Make Way For Industrial Wind Turbines


A green paradox: Deforesting the Amazon for wind energy in the Global North                 A shift to wind energy is leaving a trail of destruction in Ecuador, with a brutal impact on Indigenous communities and fragile ecosystems



We should be able to learn from Europe's energy crisis about what NOT to do, instead of Biden trying to use their actions for his energy blue print.


                Europe's energy crisis solution            


                Started by metmike - Sept. 17, 2022, 6:44 p.m.            


By now, everybody knows that natural gas and electricity market prices are up 10-fold in the last year in Europe.


Most explanations for who/what is to blame are extremely misleading to complete lies. For instance:

1. It's  evil Putin's fault.

2. It's the reliance on dirty, planet killing fossil fuels fault.

3. It's because they didn't switch completely to the panacea green energy that creates a utopian world of  unlimited jobs and cheap energy, while cleaning up the environment and  saving the planet.

That's all really wrong.

Previous discussion(on Europe):


The picture/graph in this post is worth a thousand words but please do read the explanation:


Graph shows gross power production in Germany 1990-2021, by source. Graph: CLEW 2021.


By 7475 - Nov. 18, 2022, 7:15 p.m.
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If I remember correctly ......

 Once upon a time , diesel fuel was cheaper than the more refined leaded/unleaded fuels.

That was one reason commercial vehicles ( trucks ) were equipped with the the
"dirtier" funny sounding slow accelerating diesel engines. Maintenance of diesel engines was simpler and more cost effective too.

 Then came Desert Storm and I observed diesel fuel dramatically and swiftly increasing in price. I thought that was indicative of our capabilities to produce diesel since quantities of the fuel , I assumed , were diverted to military use. 

 I also assumed prices would normalize after the conflict had resolved. But lo and behold, like taxes , diesel fuel prices remained elevated and I wondered about the effect that would have on commercials and on refining capacities ( diesel fuel production ).

 Prices have remained quite higher than the unleaded products. 

My inquiries about this have been met with shrugs over the years and I'm a bit confused.

 If my observations are true , why have the lesser refined diesel fuels remained at a premium to the unleaded products and why is the diesel engine , seemingly so , still a preferred commercial vehicle etc  engine? Diesel fuel prices seem way out of line.

 That's my weekend question. Been wondering for quite some time.


By metmike - Nov. 18, 2022, 7:47 p.m.
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This is one of the best questions ever asked here!

Heating oil and diesel are pretty much the same thing.

Understanding the price gap between gasoline and diesel fuel


According to our data set of 161 countries, gasoline is more expensive than diesel fuel in 84% of all countries. On average, diesel is 9,84% cheaper but the difference varies considerably across countries as well as within countries over time. Here we discuss several factors contributing to the price spread.

Both gasoline and diesel fuel are produced from crude oil and therefore the cost of crude oil is the main factor influencing gasoline and diesel prices. However, fuel prices also reflect refining costs, taxes, and distribution and marketing costs. Additionally, retail prices are affected by market demand. These factors lead to a price spread between gasoline and diesel.

Refining costs:  During the process of refining, crude oil is separated into different components and these components are converted through further treatments into gasoline, diesel fuel, and other petroleum products. Diesel fuel is heavier and less volatile than gasoline, which makes it simpler to refine from crude oil. As a result, diesel tends to be cheaper than gasoline in most countries around the world. However, the introduction of Ultra-Low Sulfur Diesel (ULSD) between 2006 and 2010 increased diesel production costs since ULSD requires more refining.

Taxes:  Many countries tax diesel and gasoline differently. For example in the USA the federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. In contrast, most European countries tax diesel more lightly than gasoline. Since taxes are one of the major components of the final consumer prices of fuels, tax policy determines to a great extent the cross-country differences in gasoline and diesel prices.

The spread between diesel and gasoline prices also varies over time with the following factors:

Demand: In contrast to gasoline, diesel fuel is used to power not only cars but also public transportation vehicles, large delivery trucks, off road vehicles, boats, machinery, generators, etc.  During periods of  economic expansion industrial sector energy demand increases significantly and diesel prices rise more than gasoline prices. If the demand for diesel fuel is higher, the price spread will widen


Heat with Diesel If You Run Out Of Heating Oil In Your Tank

Diesel fuel used in diesel-powered vehicles and other engines is basically No. 2 home heating oil. The only difference is that home heating oil has a dye added to it that distinguishes it from untaxed or lower-taxed fuels. The higher-taxed diesel fuels are used for over-the-road vehicles. However, if an emergency were to arise such as the home running out of heating oil, diesel fuel could be purchased at the local service station. Homeowners can substitute diesel fuel for home heating oil in any quantity necessary while awaiting delivery of home heating oil.



How much tax do we pay on a gallon of gasoline and on a gallon of diesel fuel?        


The taxes and other fees on retail gasoline and diesel fuel, in cents per gallon, as of July 1, 2022 are:

Average of total state taxes31.6733.45

By metmike - Nov. 18, 2022, 8:37 p.m.
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I've spent some time here this evening, educating myself and sharing but there are no explanations that actually tell us  with  information that accounts for the disparity of the difference........why there's plenty of unleaded and we're extremely low on unleaded.

The increase in demand for diesel just  does not add up nor do other things to give us this great of a disparity but I might have part of it figured out. It could be related to NOT diverting enough resources or product to hydrocrack diesel fuel/heating oil in the refineries compared to the amount going to gasoline that would get catalytic cracking done to it. 

Even more likely, the refinery's that have closed or been repurposed to processing renewables because of the war on fossil fuels were likely ones that did alot of hydrocracking to refine diesel. This is the only thing that makes sense to me. We just aren't making as much diesel as we are gasoline in addition to the increased demand.


Hydrocracking and catalytic cracking are how refineries manipulate octane and cetane ratings. In the refining processes of diesel vs gasoline, hydrocracking is for diesel. Catalytic cracking is for gasoline

Hydrocracking Diesel Fuel in a Refinery

Hydrocracking is the process of breaking large, long-chain molecule hydrocarbons into smaller hydrocarbons. The purpose of breaking hydrocarbon chains into smaller chains is to change their flashpoints and compression resistance. “In a refinery, the hydrocracker upgrades VGO through cracking while injecting hydrogen. This yields a high volume of high-quality diesel and kerosene product. The hydrocracker is particularly valuable in a refinery that is trying to maximize diesel production and reduce residual fuel oil.”

The process has two stages. Each stage occurs in a separate reactor vessel. In the first stage, a hydrotreating catalyst saturates aromatics — one of the two types of unsaturated hydrocarbons — with hydrogen. At this stage, the reactor vessel also removes the sulfur and nitrogen contaminants from the straight-run diesel. In the second stage, a different reactor vessel breaks now-saturated hydrocarbons into smaller parts and, again, saturates any unsaturated molecules or molecule chains with hydrogen.

The result of hydrocracking is highly refined, contaminant-free diesel with a lower compression resistance than straight-run diesel.

But again, the refining processes of diesel vs gasoline are different. The gasoline version of hydrocracking is catalytic cracking. 


Hydrocracking is an important source of diesel and jet fuel


Diagram of the hydrocracking process, as explained in the article text 

Source: U.S. Energy Information Administration.


Many refiners do not have hydrocrackers, but as demand for middle distillates such as jet fuel, kerosene, and diesel increases both in the United States and around the world, refiners may find incentive to build them to increase distillate yield.  In the emerging low-sulfur world, the hydrocracker often converts high-sulfur materials, which would end up in marine or boiler fuel, into low-sulfur fuels for vehicles and airplanes. A refinery's ability to upgrade low-value products into high-value products and convert high-sulfur material to low-sulfur material with a secondary unit like a hydrocracker plays a key role in determining its economic fate.

By metmike - Nov. 18, 2022, 8:49 p.m.
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OK, I found the biggest problem by an extremely wide margin. There are only half as many refineries compared to 40 years ago and we are closing more and building ZERO new ones to replace them.

They want to blame it on the pandemic which is hogwash. Yes, demand decreased in 2020 and it gave more refineries the excuse to close at the time but THEY DECIDED TO CLOSE FOREVER because of the war on fossil fuels. So when demand picked back up..........they didn't open back up. Almost as many refineries closed in 2018 and 2019 BEFORE the pandemic. It's even worse in Europe where they are a couple years ahead of us in making disastrous energy delivery system moves to fight a fake climate crisis.

I showed you that above: https://www.marketforum.com/forum/topic/90774/#90805




By metmike - Nov. 18, 2022, 9:24 p.m.
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This has been a gradually accumulating problem for years that was not critical when we had 50%+ more refineries and could afford snafu's.  It's insanely irresponsible to let an extremely critical fuel like this get so low ahead of Winter, when our ability to make it is permanently compromised with a the high demand season coming up and we're no longer capable of catching up without a host of factors going our way. 

Heating oil in storage has never been this low in November history.

So we will likely divert more refining of crude to heating oil and diesel for the next few months, especially now that the election is over and Biden's incentive to suppress gas prices by refining more gasoline has passed.

However, the millions of people that use heating oil to heat their homes in the Northeast will be paying a lot of extra money this Winter because of this.

Even worse. Diesel prices were $2.50 higher than gasoline prices in Evansville IN 2 days ago BECAUSE OF THIS.  Almost double. Every truck and train transporting goods across the country had to pay close to double for their fuel. 





 The Trucking Industry’s Biggest Problem Right Now? Fuel Costs

  The rising price of gas overtook driver shortages as the biggest issue facing the trucking industry in 2022.

 Top Issues for Trucking Graph 


This was well known earlier this year and yet, they did very little to bring more diesel/heating oil to the market. With absolute certainty, this is responsible for a good chunk of the current inflation we see at the grocery store and other stores. Are there any plans to build new refineries, the only real solution? Not that I can find.

This was SELF INFLICTED by the government that wants high energy prices to stifle demand of fossil fuels to impose their energy from environmental hell sources using crony capitalism and political agenda/governmental abuse of power.  

There is no climate crisis! I've proved that hundreds of times here.



Rising fuel costs impacting trucking industry, driving up costs to consumers




No new refineries likely ever built again in the U.S., Chevron CEO warns


Chevron (NYSE:CVX) CEO Mike Wirth said Friday that he does not expect another oil refinery will be built in the U.S. ever again, due to decades of federal government policies. 

"We haven't had a refinery built in the United States since the 1970s. My personal view is there will never be another new refinery built in the United States," Wirth said in an interview with Bloomberg.

 "You're looking at committing capital 10 years out, that will need decades to offer a return for shareholders, in a policy environment where governments around the world are saying we don't want these products," Wirth said. 

"At every level of the system, the policy of our government is to reduce demand, and so it's very hard in a business where investments have a payout period of a decade or more," according to Wirth. "And the stated policy of the government for a long time has been to reduce demand for your products.


metmike: You reduce demand, like he insinuated, with higher prices. Only thing is that the life blood of almost every developed country is the world's economy is cheap, dependable and abundant fossil fuels. 

There is no disputing that, especially at this point in history. The harder you fight that and have really, REALLY detrimental energy policies like those of the current administration........the more damage there will be to the economy.

This has been the plan now for well over a decade. It's totally by design!

Uttered in 2008, still haunting Obama


 “If somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them,” Obama said, responding to a question about his cap-and-trade plan. He later added, “Under my plan … electricity rates would necessarily skyrocket.”

 Of course, cap and trade is long dead. But coal-fired power plants are powering down nationwide, and they are blaming the Obama Environmental Protection Agency. The president’s critics say proposed greenhouse gas regulations for future power plants are designed to cripple the coal industry.




By metmike - Nov. 18, 2022, 10:30 p.m.
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Recent related threads:

Biden Puts Fingers in His Ears


Draining the SPR for self serving politics-NTR


By 7475 - Nov. 18, 2022, 10:42 p.m.
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Thanks mm , you sure do your share of homework !

 There is a lot of science , organic chemistries etc ,lots of supply / demand stuff , more environmental regulations and such, refinery capacity past and present. 

 But am I right about  price disparity becoming instantaneous at the onset of Desert Storm and remaining since then, more so than the general risk premium associated with all petro products during that period warranted? From what I can glean my thoughts are reasonably well founded.

 And I'm supposing that's just way the economics are exploited. I was curious if there was a more logical/justified reason for all that.

 Seems I'm the only one in my circles who even has noticed - truckers included.

 PS - From what I've found when researching this, is that diesel fuel , even at today's prices, still delivers more bang for the buck - and that may simply be the answer / reason to my thoughts.

By metmike - Nov. 18, 2022, 11:14 p.m.
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This is just 5 years below but I see what you mean about diesel always being just a bit higher than gasoline.

Interesting that their graph shows retail diesel being $1.26 higher. At our pumps in Evansville IN, it's double that amount higher. This is the main reason for me to start this thread.