6 ms·

Diesel Margins Top $100 a Barrel to Reach Record High as Supply Crunch Grows

75 points by toomuchtodo 2mo ago

toomuchtodo 2mo ago
https://archive.today/FXENu https://archive.today/FXENu Related: https://en.wikipedia.org/wiki/Crack_spread https://en.wikipedia.org/wiki/Crack_spread https://rbnenergy.com/market-data/3-2-1-crack-spread https://rbnenergy.com/market-data/3-2-1-crack-spread https://www.eia.gov/todayinenergy/detail.php?id=1630 https://www.eia.gov/todayinenergy/detail.php?id=1630 https://financialpost.com/news/posthaste-an-energy-shock-much-bigger-than-the-oil-is-brewing-out-there https://financialpost.com/news/posthaste-an-energy-shock-muc...
Animats 2mo ago
This is a refining capacity problem, not an crude oil supply problem. The various wars have taken out refining capacity and transport capacity. On the crude oil side, the US strategic petroleum reserve is declining rapidly.[1] That took a hit during COVID and the early Ukraine war because production was down. Refilling started afterward, but didn't take it up to normal levels. There's still maybe a year of oil left. [1] https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCSSTUS1&f=W https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...
- lovich 2mo ago
  Doubt there’s a year. They’re currently draining it down to like 270-280ish million barrels. Which is breaking the integrity of the caverns and they can’t actually drain it completely it needs something like 100ish million barrels at minimum capacity to not fuck up the pipes. On the integrity side. The caverns were only designed for a lifetime of 5 full drawdowns[1]. The caverns the oil is stored in and the pillars supporting them are made of salt. They get the oil out by pumping water in which floats the oil up. Salt has certain integrity problems when submerged in water or so I’ve been told. This current admin doesn’t appear to accept the idea of negative consequences for their actions so I would not be surprised if they destroy the caverns because they think they can suck every last drop out. [1] https://www.msn.com/en-us/money/markets/frequent-oil-draws-from-us-strategic-reserve-push-old-system-to-breaking-point/ar-AA27NpwL https://www.msn.com/en-us/money/markets/frequent-oil-draws-f...
  - neaden 2mo ago
    It's very annoying that the cost of fixing all this and replenishing the stockpile is going to most likely fall on people who had little to nothing to do with it becoming such a big problem.
    - 27183 2mo ago
      The cost of fixing this will be everyone's problem. If we suddenly have to ramp up domestic production because diesel is >$10/gal it'll be a no holds barred unmitigated environmental catastrophe. We will be drilling and spilling absolutely everywhere, because the alternative is dead people in the streets. Emergencies like this are one nightmare scenario accelerant of climate disaster.
      - MomsAVoxell 2mo ago
        The dead people in the streets are already why diesel is >$10/gal. Don’t want expensive gas? Don’t start wars. Invest more in peace than war.
        27183 2mo ago
        well sure.. obviously. but only very few actually have any control over that and they're not incentivized to choose peace. the best the rest of us can do is vote in elections. it doesn't generally work out very well though.
        MomsAVoxell 2mo ago
        Actually we can do a lot more than just vote. We can demand justice for our own war crimes, and not be complacent about it. We can hold our own democracies accountable for the mass murder that we pay for. We can absolutely demand that prosecutions occur - or else, what else are our claims of liberal, free democracy good for? The apathy you describe allows the bombs to continue to fall. Every 15 minutes. For the past 26 years, mostly on innocent human beings. We can absolutely dissuade the continued dehumanization of cultures our ruling elite deem inferior and thus qualified for destruction. We can absolutely reach outside our own cultural bubbles and discover the truth of those we are taught, by authorities, to hate. We can resist. We must resist. Or else, what are our societies good for?
- windexh8er 2mo ago
  The upside is that some diesel engines could run on alt fuels via transesterification, but given the supply chain isn't there I would gather electrification would happen faster. Curious how far they could push blends in a modern diesel if needed. Modern fuel rails (at 30k+ ft lbs) require the lower viscosity of refined diesel unlike older motors.
martythemaniak 2mo ago
I think declaring the Straight of Hormuz a US territory will solve this problem.
- MomsAVoxell 2mo ago
  Declaring the US an enemy to the free people of the world is going to solve it, that’s for certain.
- cjbenedikt 2mo ago
  How? Or was it sarcasm?
  - duttish 2mo ago
    Personally I assume there was an implied /s at the end
    - pbkompasz 2mo ago
      I can imagine Pete Hegseth saying that exact sentence to President Trump.
    - martythemaniak 2mo ago
      Well, there's an unspoken rule in SV/HN circles about when the take Trump's idiocies seriously and when to ignore them. For example, "Gulf of America" and "Department of War" you're supposed to take seriously, and all SV communications feature these prominently. Correcting someone about the fact that "The Department of War" doesn't exist will get you downvoted, but apparently you're not supposed to take "Straight of Hormuz is US territory" seriously? I'm am very bad at discerning this rule.
      - rybosome 2mo ago
        Correcting someone about the fact that “The Department of War” doesn’t exist is pedantic. I wouldn’t go downvote a random comment making the correction, but if I posted a substantive comment remarking on current events and received a reply only pointing out that “it’s ACTUALLY the Department of Defense” then I’d definitely downvote that. Correcting others’ language on this point isn’t saving democracy, it’s needling others on technicalities who very well might be largely aligned with your views. I think the altered name is clownish and reflects the buffoonery of everybody in charge, but I might still use it when making a point because using it in context is not an endorsement.
ck2 2mo ago
highest Diesel price per gallon national average was $5.81 after covid June 2022 we are most certainly going to break that by the end of the year (it's $5.47 average today) they are trying to use Strategic Oil Reserve (and maybe Venezuela) as a piggy bank but all that's about to break badly, permanently if this administration lets it go down to 70 million barrels despite the warnings by experts at 300 million, they'll never repair the damage
- Eric_WVGG 2mo ago
  When you say “never repair the damage,” do you mean that the practicality of refilling the stores is impossible due to demand requirements, or something else I’m missing?
  - briffle 2mo ago
    i'm not an expert in the oil industry, but my understanding is that caverns they have made are full of liquid to keep them from collapsing. For every barrel of oil they pump out, they pump a barrel of water in, and push more oil to the top and grab it out. And that once a certain percentage of it is just water, it changes its density, and all the calculations for its 'holding' strength were assuming a certain density range..
  - lovich 2mo ago
    The caverns the oil are stored in are old salt mines that were repurposed but that means the walls and pillars are made of salt. They pump water into the caverns to float the oil to the top when they extract it. The water itself already dissolves the salt but if you get down to 70 million barrels then you start getting salt water touching on the plumbing which corrodes it, as well as the last bits of oil are sludgy and can also foul the pipes. The strategic oil reserves were not built with an expectation of being used perpetually, they had a lifetime expectation of 5 full drawdowns and we’ve repeatedly done fractional drawdowns. I only learned this a year ago and felt like we as the public have been mislead as growing up and as an adult the government always presented drawdowns as something that wouldn’t be a problem, we could always just top it back up later. And although I hate ever doing both sides arguments that’s been the impression I got from every admin since Clinton.
metalman 2mo ago
It is just amazing watching how markets are working to build prosperity for the rich. With scarcity a thing of the past, bombing choke points is proving to be wildly profitable and as capital never sits still it can be wherever conditions are nicer. whoooeee $2.40 a gallon of pure profit, but when you strip away the rest of the scam, pumping, production, shipping and distribution are still only $1/gal, so full profits not counting interest lending to people to buy the car and the fuel in the first place are more than 75% right now. And with NOWHERE left to put the money, AI.
leonidasrup 2mo ago
This should help with transition to electric vehicles. On the other hand, batteries for EVs are produced in even smaller number of countries (mostly China) then oil is pumped (Middle east, US, Russia, Canada). https://www.iea.org/commentaries/global-battery-markets-are-growing-strongly-and-so-are-the-supply-risks https://www.iea.org/commentaries/global-battery-markets-are-... https://en.wikipedia.org/wiki/List_of_countries_by_oil_extraction https://en.wikipedia.org/wiki/List_of_countries_by_oil_extra...
- downrightmike 2mo ago
  #StreetCarsAreAThing
  - deleted 2mo ago
    [deleted]
- triceratops 2mo ago
  Chinese companies also supply 15-20% of the world's fuel tanks for cars and more for heavy vehicles: https://en.wikipedia.org/wiki/YAPP_Automotive_Systems https://en.wikipedia.org/wiki/YAPP_Automotive_Systems. Funny how that's not a problem. Batteries. Are. Not. Oil. They are oil tanks.
  - leonidasrup 2mo ago
    "However, more than 90% of battery storage applications rely on LFP batteries that are almost exclusively supplied from China, which accounts for almost all global manufacturing capacity and the associated technical expertise. Korean producers are investing to scale up LFP battery production that can offer an alternative, but they face intense competition from established, lower-cost Chinese producers in an oversupplied market." https://www.iea.org/commentaries/global-battery-markets-are-growing-strongly-and-so-are-the-supply-risks https://www.iea.org/commentaries/global-battery-markets-are-...
    - triceratops 2mo ago
marten31 2mo ago
The refining bottleneck is the part people miss. Crude supply headlines get all the attention but margins blow up when you can't process what you have.

75 points by toomuchtodo 2mo ago

https://archive.today/FXENu https://archive.today/FXENu Related: https://en.wikipedia.org/wiki/Crack_spread https://en.wikipedia.org/wiki/Crack_spread https://rbnenergy.com/market-data/3-2-1-crack-spread https://rbnenergy.com/market-data/3-2-1-crack-spread https://www.eia.gov/todayinenergy/detail.php?id=1630 https://www.eia.gov/todayinenergy/detail.php?id=1630 https://financialpost.com/news/posthaste-an-energy-shock-much-bigger-than-the-oil-is-brewing-out-there https://financialpost.com/news/posthaste-an-energy-shock-muc...

Animats 2mo ago

This is a refining capacity problem, not an crude oil supply problem. The various wars have taken out refining capacity and transport capacity. On the crude oil side, the US strategic petroleum reserve is declining rapidly.[1] That took a hit during COVID and the early Ukraine war because production was down. Refilling started afterward, but didn't take it up to normal levels. There's still maybe a year of oil left. [1] https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCSSTUS1&f=W https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...

lovich 2mo ago
Doubt there’s a year. They’re currently draining it down to like 270-280ish million barrels. Which is breaking the integrity of the caverns and they can’t actually drain it completely it needs something like 100ish million barrels at minimum capacity to not fuck up the pipes. On the integrity side. The caverns were only designed for a lifetime of 5 full drawdowns[1]. The caverns the oil is stored in and the pillars supporting them are made of salt. They get the oil out by pumping water in which floats the oil up. Salt has certain integrity problems when submerged in water or so I’ve been told. This current admin doesn’t appear to accept the idea of negative consequences for their actions so I would not be surprised if they destroy the caverns because they think they can suck every last drop out. [1] https://www.msn.com/en-us/money/markets/frequent-oil-draws-from-us-strategic-reserve-push-old-system-to-breaking-point/ar-AA27NpwL https://www.msn.com/en-us/money/markets/frequent-oil-draws-f...
- neaden 2mo ago
  It's very annoying that the cost of fixing all this and replenishing the stockpile is going to most likely fall on people who had little to nothing to do with it becoming such a big problem.
  - 27183 2mo ago
    The cost of fixing this will be everyone's problem. If we suddenly have to ramp up domestic production because diesel is >$10/gal it'll be a no holds barred unmitigated environmental catastrophe. We will be drilling and spilling absolutely everywhere, because the alternative is dead people in the streets. Emergencies like this are one nightmare scenario accelerant of climate disaster.
    - MomsAVoxell 2mo ago
      The dead people in the streets are already why diesel is >$10/gal. Don’t want expensive gas? Don’t start wars. Invest more in peace than war.
      - 27183 2mo ago
        well sure.. obviously. but only very few actually have any control over that and they're not incentivized to choose peace. the best the rest of us can do is vote in elections. it doesn't generally work out very well though.
        MomsAVoxell 2mo ago
        Actually we can do a lot more than just vote. We can demand justice for our own war crimes, and not be complacent about it. We can hold our own democracies accountable for the mass murder that we pay for. We can absolutely demand that prosecutions occur - or else, what else are our claims of liberal, free democracy good for? The apathy you describe allows the bombs to continue to fall. Every 15 minutes. For the past 26 years, mostly on innocent human beings. We can absolutely dissuade the continued dehumanization of cultures our ruling elite deem inferior and thus qualified for destruction. We can absolutely reach outside our own cultural bubbles and discover the truth of those we are taught, by authorities, to hate. We can resist. We must resist. Or else, what are our societies good for?
windexh8er 2mo ago
The upside is that some diesel engines could run on alt fuels via transesterification, but given the supply chain isn't there I would gather electrification would happen faster. Curious how far they could push blends in a modern diesel if needed. Modern fuel rails (at 30k+ ft lbs) require the lower viscosity of refined diesel unlike older motors.

martythemaniak 2mo ago

I think declaring the Straight of Hormuz a US territory will solve this problem.

MomsAVoxell 2mo ago
Declaring the US an enemy to the free people of the world is going to solve it, that’s for certain.
cjbenedikt 2mo ago
How? Or was it sarcasm?
- duttish 2mo ago
  Personally I assume there was an implied /s at the end
  - pbkompasz 2mo ago
    I can imagine Pete Hegseth saying that exact sentence to President Trump.
  - martythemaniak 2mo ago
    Well, there's an unspoken rule in SV/HN circles about when the take Trump's idiocies seriously and when to ignore them. For example, "Gulf of America" and "Department of War" you're supposed to take seriously, and all SV communications feature these prominently. Correcting someone about the fact that "The Department of War" doesn't exist will get you downvoted, but apparently you're not supposed to take "Straight of Hormuz is US territory" seriously? I'm am very bad at discerning this rule.
    - rybosome 2mo ago
      Correcting someone about the fact that “The Department of War” doesn’t exist is pedantic. I wouldn’t go downvote a random comment making the correction, but if I posted a substantive comment remarking on current events and received a reply only pointing out that “it’s ACTUALLY the Department of Defense” then I’d definitely downvote that. Correcting others’ language on this point isn’t saving democracy, it’s needling others on technicalities who very well might be largely aligned with your views. I think the altered name is clownish and reflects the buffoonery of everybody in charge, but I might still use it when making a point because using it in context is not an endorsement.

ck2 2mo ago

highest Diesel price per gallon national average was $5.81 after covid June 2022 we are most certainly going to break that by the end of the year (it's $5.47 average today) they are trying to use Strategic Oil Reserve (and maybe Venezuela) as a piggy bank but all that's about to break badly, permanently if this administration lets it go down to 70 million barrels despite the warnings by experts at 300 million, they'll never repair the damage

Eric_WVGG 2mo ago
When you say “never repair the damage,” do you mean that the practicality of refilling the stores is impossible due to demand requirements, or something else I’m missing?
- briffle 2mo ago
  i'm not an expert in the oil industry, but my understanding is that caverns they have made are full of liquid to keep them from collapsing. For every barrel of oil they pump out, they pump a barrel of water in, and push more oil to the top and grab it out. And that once a certain percentage of it is just water, it changes its density, and all the calculations for its 'holding' strength were assuming a certain density range..
- lovich 2mo ago
  The caverns the oil are stored in are old salt mines that were repurposed but that means the walls and pillars are made of salt. They pump water into the caverns to float the oil to the top when they extract it. The water itself already dissolves the salt but if you get down to 70 million barrels then you start getting salt water touching on the plumbing which corrodes it, as well as the last bits of oil are sludgy and can also foul the pipes. The strategic oil reserves were not built with an expectation of being used perpetually, they had a lifetime expectation of 5 full drawdowns and we’ve repeatedly done fractional drawdowns. I only learned this a year ago and felt like we as the public have been mislead as growing up and as an adult the government always presented drawdowns as something that wouldn’t be a problem, we could always just top it back up later. And although I hate ever doing both sides arguments that’s been the impression I got from every admin since Clinton.

metalman 2mo ago

It is just amazing watching how markets are working to build prosperity for the rich. With scarcity a thing of the past, bombing choke points is proving to be wildly profitable and as capital never sits still it can be wherever conditions are nicer. whoooeee $2.40 a gallon of pure profit, but when you strip away the rest of the scam, pumping, production, shipping and distribution are still only $1/gal, so full profits not counting interest lending to people to buy the car and the fuel in the first place are more than 75% right now. And with NOWHERE left to put the money, AI.

leonidasrup 2mo ago

This should help with transition to electric vehicles. On the other hand, batteries for EVs are produced in even smaller number of countries (mostly China) then oil is pumped (Middle east, US, Russia, Canada). https://www.iea.org/commentaries/global-battery-markets-are-growing-strongly-and-so-are-the-supply-risks https://www.iea.org/commentaries/global-battery-markets-are-... https://en.wikipedia.org/wiki/List_of_countries_by_oil_extraction https://en.wikipedia.org/wiki/List_of_countries_by_oil_extra...

downrightmike 2mo ago
#StreetCarsAreAThing
- deleted 2mo ago
  [deleted]
triceratops 2mo ago
Chinese companies also supply 15-20% of the world's fuel tanks for cars and more for heavy vehicles: https://en.wikipedia.org/wiki/YAPP_Automotive_Systems https://en.wikipedia.org/wiki/YAPP_Automotive_Systems. Funny how that's not a problem. Batteries. Are. Not. Oil. They are oil tanks.
- leonidasrup 2mo ago
  "However, more than 90% of battery storage applications rely on LFP batteries that are almost exclusively supplied from China, which accounts for almost all global manufacturing capacity and the associated technical expertise. Korean producers are investing to scale up LFP battery production that can offer an alternative, but they face intense competition from established, lower-cost Chinese producers in an oversupplied market." https://www.iea.org/commentaries/global-battery-markets-are-growing-strongly-and-so-are-the-supply-risks https://www.iea.org/commentaries/global-battery-markets-are-...
  - triceratops 2mo ago

marten31 2mo ago

The refining bottleneck is the part people miss. Crude supply headlines get all the attention but margins blow up when you can't process what you have.