Yves here. We warned early on that the sanctions on Russia were going to turn diesel scarcity into diesel shortages. More and more businesses are waking up to this risk.
By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice
- Russian refiners cut processing rates of diesel fuel.
- Already tight diesel supply is getting even tighter.
- Vitol’s chief executive Hardy: diesel supply shortage could trigger rationing in Europe
Earlier this week, Vitol’s chief Russell Hardy warned that a diesel shortage could trigger fuel rationing in Europe. Now, those warnings are multiplying, with fuel rationing no longer looking like an abstract idea.Europe is risking a blow to its economic growth, Reuters reported on Thursday, citing experts. Diesel is what freight transport uses to deliver goods to consumers, but it is also what industrial transport uses for fuel. With Russian refiners cutting their processing rates in the wake of several waves of Western sanctions, already tight diesel supply is going to get a lot tighter.
“Governments have a very clear understanding that there is a clear link between diesel and GDP, because almost everything that goes into and out of a factory goes using diesel,” the director general of Fuels Europe, part of the European Petroleum Refiners Association, told Reuters this week.
As Vitol’s Russell Hardy noted earlier this week, “Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East. That systemic shortfall of diesel is there.”
Europe is not the only one feeling the diesel pinch, however. Middle distillate stocks are on a decline in the United States, too, Reuters’ John Kemp wrote in his latest column.
Distillate inventories, according to EIA data, have booked weekly declines for 52 of the last 79 weeks, Kemp reported, falling to 112 million barrels last week. The total decline for the last 79 weeks amounts to 67 million barrels. Last week’s inventory level was the lowest since 2014 and 20 percent lower than the five-year average from before the pandemic.
“Diesel is not just a European problem, this is a global problem. It really is,” said Gunvor co-founder and chair Torbjorn Tornqvist at the FT Commodities Global Summit this week.
Energy Aspects’ Amrita Sen echoed the sentiment, saying that the diesel shortage was the worst affected oil product, noting that Europe imported close to 1 million barrels daily of Russian diesel and that at the time of the Russian invasion of Ukraine, inventories of the fuel were already much lower than the seasonal average.
The problem seems to be that diesel stocks were already tight globally when Russia invaded Ukraine and the West responded with sanctions that, although indirectly, targeted its energy industry. In addition to that, according to Vitol’s Hardy, there had been a shift in Europe from gasoline to diesel, which has further exacerbated the problem.
Then there are the commodity traders who are shunning Russian diesel because of the sanctions as well as payment headaches and transportation challenges as many European ports have banned Russian vessels from docking.
TotalEnergies is the latest: the French supermajor has said it will be suspending purchases of Russian diesel “as soon as possible and by the end of 2022 at the latest”, the company said, unless it receives other instructions from European governments.
Instead of Russian diesel, TotalEnergies said it would switch to other suppliers, notably Saudi Arabia. It will hardly be the only one to look for alternative suppliers. It looks like a hunt for diesel is in the making, if not already fully underway.
Meanwhile, the alternative suppliers may not have enough to respond to the spike in demand in short order: Saudi Arabia is already Europe’s second-largest diesel supplier after Russia but compared to its 50-percent share of the EU diesel import market, the Kingdom only has a 12-percent share.
Per Kemp’s report, Asian diesel inventories are also tighter than usual, meaning all large markets for middle distillates are experiencing a shortage. This is pushing all oil prices higher, Kemp noted in his column but this is only the beginning of a bigger problem.
In addition to freight transport, diesel is the fuel used to power mining and agricultural equipment, and it is also used in manufacturing. With prices for the fuel higher, the prices of the end products will also climb higher, fueling the inflation that has turned into a major headache for Europe and the United States.
Boosting local diesel production is another option, but according to experts, they would be buying their crude oil at higher prices, and the end product will, yet again be more expensive. What’s more, this ramp up of middle distillate production will take time to materialize.
“Over the next three months, diesel output needs to accelerate significantly, consumption growth must slow, and the market must avoid a significant loss of Russian exports,” Kemp wrote. That would be a best-case scenario and if it does not play out, Europe in particular is in for “a severe price spike” that would result in demand depression.
Before the demand depression comes, however, inflation could enter double-digit territory in some of the most vulnerable countries. And if Moscow decides to extend its demand for ruble payments for gas to its oil exports, the situation will become even more interesting than it already is, especially for Europe.
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Everybody was looking at the price of gas but it looks like we are going to get it in the back of the neck due to diesel fuel shortages. So what uses diesel? (looks around) About damn near anything vital from farming gear to trucks. Europe is going to get hit the worse and looking at an article, the countries that depend most on diesel imports from Russia are Germany, Poland, Turkey, Britain, Spain and France. How are all these countries going to transport the thousands of tons of weapons and ammo to the Ukraine if they don’t have the diesel for their trucks? Or will they get first priority? And if the government has any brains, it should prioritize diesel for farmers and the transport of vital goods – and tell Amazon to go take a hike.
If people are going to depend on the spot market to get the diesel that their country needs I can guess now that it will mostly end in tears. From my perch, I think that I see now not only an economic slowdown with hundreds of thousands of people becoming unemployed across the continent but if it keeps up, and out and out Recession with a capital ‘R’. At this stage, I do not think that Putin will have to demand Rubles for diesel exports from Russia. He only has to let the market work their magic like it is at the moment. And the way that it will work out will be the US and Europe paying high prices for diesel and leaving places like Africa and South America swinging in the breeze. Unless Russia can make arrangements to send ships of diesel to those places that is. But will countries like the US attempt to hijack those tankers like they have done for Iranian oil tankers if they get desperate enough? What a clusterf***.
https://www.reuters.com/business/energy/diesel-shortage-europe-threatens-slow-economic-growth-2022-03-24/
russia can do what america did in north africa when facing off against rommel.
rommel said they have so much fuel that they can fly birthday cakes off to generals.
russia can afford to have tanker escorts. that should drive the free tradin nafta/nato types bouncing off the walls.
in fact russia should flaunt their wealth and power by sending off a few tankers to the people who were made poor by free trade for free.
the global south would for ever remember who their real friends are.
to bad nafta albright does not get to see the inevitable results of using our superb military to pummel the weak and poor forcing them into being pillaged and plundered, err, i mean free trade.
It is not just trucks. In Europe, diesel passenger cars are on the order of 40% of the fleet.
https://www.eea.europa.eu/data-and-maps/daviz/dieselisation-of-diesel-cars-in-4#tab-chart_1
Diesel price increases and shortages will have serious consequences for tourism as we approach the strong season. Tourism related businesses (those who survived) have been eagerly anticipated the lifting of travel restrictions but the diesel story might dash their hopes of strong recovery.
Indeed though I think that some very slight de-dieselisation have occurred after 2017 on worries on diesel pollution. In Spain official statistics showed top diesel consumption in 2018 (23,5 million tons). In 2019 it went marginally down, 2020 showed a large Covid-related reduction and in 2021 it recovered to 21,8 million tons. In 2022 I only have January data showing a sharp increase compared to jan-2021. oh oh…
Having such a high level of use for personal transportation may give Europe a backstop here. Although family vacations may need to be curtailed, could at least partially avoid knee-capping industrial and agricultural transportation needs.
As I’ve commented before, very high level of diesel use here in rural Oregon for personal transportation in the form of 2500 or 3500 diesel pickup trucks used as daily drivers. When one of them is riding my a$$ on the road (while I’m already driving 5 or 10 over) and then I turn, the driver invariably floors it until they reach the next victim, and it starts over again. I imagine the already high level of road rage (over what, exactly?) might become problematic when these boyz have to pay over $5 per for the fuel of their choice.
Most commercial fishing boats use diesel as well.
Fire engines too. And the generators they carry to power water flow to the hoses also run on diesel.
The LAFD just bought an electric fire truck. It runs on batteries for roughly two hours.
Surely the Atlantic Council, which is hosting a 3 day Global Energy Forum in Dubai now, will solve this problem!
https://www.atlanticcouncil.org/programs/global-energy-center/global-energy-forum/2022-gef-agenda/
Over two years ago, Max Blumenthal asserted the Atlantic Council functions as the semi-official think tank of NATO with a long history of ramping up the proxy war in Ukraine.
https://thegrayzone.com/2019/10/13/dcs-atlantic-council-raked-in-funding-from-hunter-bidens-corruption-stained-employer-while-courting-his-vp-father/
So diesel reserves had been overall decreasing for 79 weeks — that is, since late 2020. The problem with inadequate levels of production has therefore been going on for some time.
In November last year Russia imposed stringent quotas of exports regarding mineral fertilizers, following China, which did the same in October. In December 2021, both Argentina and Russia decided to restrict the export of corn and wheat; this follows a decision in January 2021 by the Russian government to limit the export of sunflower seeds and rapeseeds. In June 2021, the Russian government introduced duties to attempt limiting the export of ferrous and non-ferrous metals, following Indonesia, which restricted the export of nickel, chromium and iron. In 2021, India, the EU and the USA restricted the export of vaccines and precursor substances.
All that is still anecdotal (and I do not have the patience to delve into the OECD database of export restrictions), but it really seems to me that crucial export spigots were being turned off long before the war in Ukraine, and that this points out at major production and logistical issues — probably triggered by the coronavirus pandemic and environmental conditions.
The globalized economic system has been partly dislocating for the past couple of years; the war in Ukraine is exacerbating the process. If this is the correct conclusion, then why did those supposedly competent technocratic governments with all the expert reporting, statistical indicators, dashboards and business intelligence at their disposal not see anything coming? And why are they further thrashing the system with their sanctions?
We’ve pointed out repeatedly that there was an underlying diesel shortage before the Russia self sanctioning (winding up sanctioning Russian energy when the intent had been to carve it out). More evidence of not enough thinking things through.
We called this “Ready Fire Aim” in the USMC…
I don’t understand why so many smart and able people are so afraid to jump the fence – this is all being choreographed to destroy the “old world order” and usher in “the new world order,” and Russia and China are its darlings.
It’s actually ‘Merica learning to play nice in the sandbox of a multipolar world or doubling down on hegemony – the neocon wet dream. The “new world order must be lead by the U.S.” says Uncle Joe, now, after setting in motion a lot of things that have potential for significant negative blowback to typical U.S. consumers. Not a problem for the elites and their PMC enablers, though significant damage to the dollar might get their attention. On a fixed income? Have some savings? Get used to inflation AND low interest rates via an accommodating Fed. We mustn’t reduce the sugar Daddy provides. Keeping markets up, while the dollar tanks is important to keep the herd from becoming uneasy.
Speak for yourself, brah. I’ve never not been in the middle of this – but maintained my presence in the land of my birth, CA. CA has options, but we ain’t there, yet.
and btw, since perhaps you’ve never made a wood fire, there is no “greenfire” – you’re all smoke then dying out.
cooking with green mesquite is a thing, in Texas…but it takes a really good bed of coals from seasoned wood to start with.
more of a marketing thing, these days.
gives the meat(especially ribs in my experience) a different, stronger smoke flavor.
we’ve used a lot of green-ish pecan for cooking around our place over the years, largely due to availability…and an unwillingness to use the heating wood.
(and don’t use green(unseasoned) wood in yer fireplace or woodstove, unless you like chimney fires.)
as for the rest, i’d venture that the herd is already becoming quite uneasy.
likely mostly due, at this point, to fuel prices.
when i go among the mundane and eavesdrop, that’s all anybody’s talking about.
I have been out and about on the bus recently. The degree of bad and risky driving seems to be greater than usual. People must be frustrated. They are taking chances on the road that saner minds would recoil from. I saw multiple examples out on Hardy Street, the main drag hereabouts, of drivers tailgating in stop and go traffic, as in a foot to two feet of separation. A few loud squeals were heard during the time I spent waiting for the bus in front of the ‘Whole Foods Clone Grocery Store.” [I go there because they are the only game in town for organic cheeses. The Health Food Store is almost always out of that item when I go there. The other grocery venues didn’t even pretend to care when I asked them about organic cheeses.]
Prices are obviously up, and are a common source of exasperation in the public sphere. I heard two separate people complain to a companion about the rise in prices at the Harbor Freight store today. $9.99 is now the “New” $4.99. Many prices have doubled since last fall.
We as a civil population are being “nickled and dimed” by the economic system now. Candy bars are now about a dollar. Two years ago, the same candy bars were usually $.50 or sometimes $.25 if on sale.
I am working on several small vegetable beds in the yards. Plan ahead. Phyllis is enthusiastic about it. (One of her grandfathers grew a quarter acre intensive vegetable garden every year up until his stroke.)
Plant a big garden this year Amfortas. You all might need it.
Stay safe and love and kisses from the old geezers to you and especially your wife.
ambrit – Good evening and best to you and Phyl. Y’all stay safe, too. From another old geezer. lol
My mother had a 100 sq ft French postage stamp garden after I left home where she grew more vegetables than she and my father could eat. Most of it was given to neighbors.
The best Silver Queen corn I ever had was picked 10 minutes before it went in the pot. The natural sugars didn’t have time to break down into other carbs and it was sooo sweet.
Amfortas – Re cooking with pecan wood.
A barbeque joint down the street from me had the best barbeque in town, IMNSHO, and they used pecan almost exclusively. It gave a wonderful taste profile to the pork and chicken.
Of course, there’s plenty of pecan around here as it’s one of our cash crops.
Sadly, they went out of business because their building was collapsing and they didn’t have the money to fix or rebuild it.
the new world order was ushered in when nafta billy clinton destroyed GATT which was sovereignty and democratic control, and replaced it with the corporate world trade organization, which truman would not allow to run america.
“We had a pretty nice, diversified job base here,” Ed Harry, a former labor official and Trump voter, told me. “Then with NAFTA and GATT, all the jobs started leaving. Union members no longer had jobs. They said, ‘I used to have a job that had a living wage. Now, I have to have two or three jobs to do what I have to do.’ They just got pissed and they went for a gamble.”
the dim wit nafta democrat representing the corporations, err, i meant the workers was still singing the praises of free trade, YA GOT DUMB!
http://washingtonmonthly.com/2017/08/14/this-county-was-a-democratic-stronghold-then-came-trump/
vao — “If this is the correct conclusion, then why did those supposedly competent technocratic governments with all the expert reporting, statistical indicators, dashboards and business intelligence at their disposal not see anything coming?”
Because just-in-time inventories.
Because private equity, hedge fund, etc financial engineering.
Because primacy of dividends and bonuses.
Because regulatory capture.
Because … I’m tired of typing and you’re probably tired of reading.
Because, you know, when you’re rich, nothing too much bothers you anyway. You know you’ll come out on top no matter what happens.
And they always do.
Yes, but they stay there generally by the dictates of convention. When the social contract unravells fully, they will find themselves as tempting targets for the formerly “downtrodden” masses. Alas, the lower and working classes will suffer collateral damage from the “Times of Troubles.”
Stay safe. Prepare for the worst. That way, you won’t be unpleasently surprised.
I’ll say it again, the brutal reality is that the leadership of the Western world is totally incompetent. They have been so accustomed to being on top that when they are faced with a nation that can actually fight back, they are incapable of anticipating even the most predictable of outcomes.
If there are food shortages, and yes, agriculture is highly reliant on diesel, there could be a serious amount of political instability. This is something that our politicians are too immature to understand. There is also the matter that the delivery trucks and the like that power our modern logistics supply chains, also rely on diesel.
The Europeans aren’t going to be able to sanction the Russians for very long. Their economies are all going to face serious challenges if they do and not just in their energy supplies, but also food. If the Russians are smart, they will demand that all payments are in roubles.
As for the US, I see a continuation of the loss of credibility. The Iraq War, Hurricane Katrina, the 2008 Financial Crisis, the Coronavirus mishandling in the US, the failed war in Afghanistan, and now this, represent a trend of failure in the American elite. Its like a faster version of the collapse of Rome. The American ruling class is incompetent at its supposed area of expertise.
There will be de-dollarization. Not just because China and Russia want it, but also because the US has proven that its reserves are not safe. This is not the only incident of this happening, Afghanistan is another example of frozen foreign reserves. I could easily see a nation like China choosing to get rid of its US reserves. It is not too hard to imagine what a future trade war could mean. The irony is that the US is losing dollar hegemony not necessarily because of the Chinese making relative gains, but their own actions. If private property was so sacrosanct, then the US has not acted like it is.
One interesting question is if the European nations will begin to turn on the US. There are no plans to secure American dieselor natural gas in the quantities needed. Indeed, the US is quite short of fossil fuels itself. Note the desperate attempts to make nice with the Middle East or nations like Venezuela. Biden also seems to be desperate to prevent a midterm rout, which is a likely outcome now.
Re; “de-dollarization.”
The “original sin” was not Eve eating the apple……
The original sin was satan/lucifer lying to her. Eve was as innocent as a newly born babe, so she naturally believed the false narrative of “the great deceiver”.
“After Trudeau freezes trucker-protesters’ bank accounts, a run on Canadian banks shuts down services”…….
Our system is predicated on “honesty”, “being trustworthy” and “telling the truth”. If people who donated to the Canadian truckers can have their accounts frozen…..? or, Now, the USA can seize $300,000,000,000 of Russian reserves?
Clearly, the banks are not trustworthy places to store your surplus money, wether you are little person, or a nation state.
We have transitioned from a “Laws based system” to a “rules based system”. Their rules…
The political class will be charging their fuel bill to the company (EU) so no need to worry. From my humble perch in South Africa, I wonder if ordinary people in the west have any hope of acting as a bulwark against the chaos, economic and social, unleashed by the terminal incompetence of the western political elites that you mention. Elections used to be the mechanism for people to vote corrupt and incompetent politicians out of office, but unelected EU bureaucrats in Brussels are a safe distance from the wrath of their citizens. Ensconced in their ivory tower, they’re out of reach and can wield their incompetence with no accountability whatsoever…
Surely the Atlantic Council, which is hosting a 3 day Global Energy Forum in Dubai now, will solve this problem!
https://www.atlanticcouncil.org/programs/global-energy-center/global-energy-forum/2022-gef-agenda/
Surely the Atlantic Council, which is hosting a 3 day Global Energy Forum in Dubai now, will solve this problem!
https://www.atlanticcouncil.org/programs/global-energy-center/global-energy-forum/2022-gef-agenda/
Over two years ago, Max Blumenthal asserted the Atlantic Council functions as the semi-official think tank of NATO with a long history of ramping up the proxy war in Ukraine.
https://thegrayzone.com/2019/10/13/dcs-atlantic-council-raked-in-funding-from-hunter-bidens-corruption-stained-employer-while-courting-his-vp-father/
“In his own comments, Biden emphasized the need to power Europe with non-Russian sources of natural gas. This provided a prime opportunity to Ukrainian suppliers like Burisma and US energy titans. Many of these energy companies, from Chevron to Noble Energy, also happen to be top donors to the Atlantic Council”
Max Blumenthal might disagree.
https://thegrayzone.com/2019/10/13/dcs-atlantic-council-raked-in-funding-from-hunter-bidens-corruption-stained-employer-while-courting-his-vp-father/
and this is how it really got started, both russia and china have repeatedly stated to nafta joe biden, what about yugoslavia?
https://www.globalresearch.ca/globalisms-first-victim-natos-war-on-yugoslavia/5633684
Globalism’s First Victim. NATO’s War on Yugoslavia
By David Orchard
Global Research, March 27, 2018
Region: Europe
Theme: US NATO War Agenda
In-depth Report: THE BALKANS
For what I have read, Germany has issued a strategic plan on energy. According to this, Germany would become independent of Russian carbon by autumn, independent from Russian oil by the end of 2022 and independent from Russian Natl. Gas by the end of 2024 according to the Economy Ministry/Secretary. (This from an article in Spanish).
In line with Total’s claim. Germany is by far the largest diesel consumer in the EU. Diesel consumption in Spain is also high in relative terms though it has somehow been reduced lately. Whether all EU countries can become ‘independent of Russian energy imports’ in so short time is something very much above my pay grade but these wouldn’t be the first dubious projections ever made in the EU. They do not explain if such plans come with rationing (my guess is yes) and price projections (with the necessary pain for us peasants). Given the pride that EU pays to ‘free competition’ and not intervening in markets one can expect lots of bad things coming.
But note, for now, rationing is nowhere to be heard in the official chat. At least I haven’t read anything like that from policymakers. For now.
I understood that even the most optimistic models result in Germany having to cut natural gas consumption seriously (as in reducing room temperatures by 4 degrees Celsius or so) until 2026, when the expensive, new LNG terminals start operating.
Curious to know how they will control home thermostats.
That’s probably where the models meet The Reality, a.k.a. unintended consequences.
Hey I think I know how: it will be ‘markets’ what control thermostats. That meaning lowest income percentiles will be first to shut down on high prices… Hopefully this doesn’t reach the elites. Imagine that! End of the world as we know it.
It is so nice to have common values such as markets. Isn’t it?
Keep an eye on the wool market…
Through Smart Thermostats of course-
https://nordvpn.com/blog/smart-thermostat-dangers/
They let power companies have all sorts of control over the power usage in your home without you being aware that they can do it. Too much power consumption because of a local heat wave? Just use the Smart Thermostats to cut the power to the air-con systems. In the poorer suburbs of course.
Russia and West at odds over gas payments in roubles
https://warontherocks.com/2022/03/the-urgent-case-for-energy-austerity/
“Governments might consider, for example, mandatory speed limits, car-free weekends, mandatory work-from-home, incentivized public transport, reduced non-essential lights at night, rolling outages, private transport rationing, and mandatory indoor temperature limits.”
They forgot grounding of all private jets.
hahaha!
https://www.youtube.com/watch?v=RvV3nn_de2k
Germans may react differently, but from the cheap seats I think the German government may find that when faced with significant inroads into the usual stability and comfort of lives their seemingly law abiding citizens are stubborn and unyielding that they are exceptional and have done enough and the government must now meet their requirements. Their rebellion may not take the form that it took in France or in Canada, but there will be a disruption that makes it clear that they were not consulted on these plans and do not approve…and it is the government that will have to change course.
One problem is propagandists often believe their propaganda. If Russia is on its knees, then it’s no problem. Everything will be back to normal. They were giddy about the Russian defense minister not being seen for two weeks and speculating Putin pulled a North Korea. Or the thousands all across Russia who protested….
The famed Kiev convoy was telling. All manner of explanations were offered and how easy it would end to blow it up with air power as if the Russians have no concept of air power. This attitude infects Western elites. Imagine not getting the latest Marvel movie.
the Houthis seriously damaged Aramco facilities last Friday, including diesel refineries. Saudis already had a diesel export ban
There is not much spare diesel refining in the worls right now
Petroleum shortages, fertilizer shortages, resulting food shortages, record polar temperatures, global pandemics… all seem to be intertwined. Why am I reminded of “The Limits to Growth”?
Yes to this
And Yes to the fact that unbridled use of Fossil Fuel is going to kill our civilization horribly.
My short view is all this disruption is pushing the choices we make to the front.
The big choices like how we use the “blessing” of all the compacted potential work that fossil fuel is while getting as faraway from its use as fast as possible.
And though late, it is better that all this is getting pushed into the Wests(the Influencers) face now.
Radical Conservation–imo–takes many shapes.
One of these shapes is to conserve one energy source—say Diesel for Class 8 transportation–and substituting it for another–like NatGas that is often just vented or flared instead of being collected.
Imagine this:
https://www.marketplace.org/2022/03/25/crypto-miners-use-natural-gas-stranded-in-wells-to-power-energy-hungry-rigs/
but instead of bitcoin, the generator ran NatGas Compressors–turning that waste into a bit cleaner transportation Fuel–say for use in Agricultural Equipment.
https://marlingas.com/virtual-pipeline-solutions/mobile-gas-compression-services/
Again, painful and disruptive as it is going to become, Change In our Choices has got to happen.
And by force is one way of prompting that choosing.
https://afdc.energy.gov/vehicles/natural_gas.html
https://environmental-conscience.com/natural-gas-pros-cons/
an aside: both my Tractor and Dump Truck run on Diesel–and I believe many solutions are just lying around awaiting our choice.
As usual the article uses some striking headline figures which exaggerate the real situation.
Taking the UK as an example the table shows Russia supplying 45% of diesel imports – scary stuff!
Checking the UK’s official ‘Digest of UK Energy Statistics’ and using DERV (diesel that is used on road vehicles – cars & trucks) we see that in 2020 Russia made up 34% of imports (not 45%) and also that the UK produces roughly as much as it imports, and then also exports some. so Russian imports actually made up only 17% of final DERV demand. A bit more manageable? Just needs fewer jerks driving Range Rovers. Agricultural and industrial uses of diesel are in the form of Gas Oil (red diesel) which is taxed differently and has a higher sulphur content. The UK imports a negligible amount of Russian Gas Oil. Always look behind the numbers. Its uncomfortable but not existential.
Saudi Arabia: the ethical alternative to Russian energy supplies. Seriously?
Diesel hit $7.00 per gallon in Santa Rosa yesterday.
Regular Gas at $6.06.
Wow! I checked on IRS official Mileage allowance.. up to $.595 per mile. Two weeks ago.
Sounds like it should be at $.75, like a first class forever stamp.
The Reuters article referred to uses some striking headline figures which may exaggerate the real situation.
Taking the UK as an example the table shows Russia supplying 45% of diesel imports – scary stuff!
Checking the UK’s official ‘Digest of UK Energy Statistics’ and using DERV (diesel that is used on road vehicles – cars & trucks) we see that in 2020 Russia made up 34% of imports (not 45%) and also that the UK produces roughly as much as it imports, and then also exports some. so Russian imports actually made up only 17% of final DERV demand. A bit more manageable? Just needs fewer folk driving Range Rovers. Agricultural and industrial uses of diesel are in the form of Gas Oil (red diesel) which is taxed differently and has a higher sulphur content. The UK imports a negligible amount of Russian Gas Oil. Always look behind the numbers. Its uncomfortable but not existential.
Simon Hallet at 9:50 Am and Momo at 1036AM posted identical comments. Never saw that before.
it turns out that natural gas from Appalachia is turning out to be very profitable for China’s state-owned Sinopec…
i had heard of stories of LNG tankers that had already transversed the Panama canal and were in the Pacific on their way to Asia turn around and go back thru Panama to deliver their gas to Europe, and wondered how that was happening, since most US LNG sales to Asia are under long term contracts…as it turns out, it’s not the American sellers of that LNG who are selling it to Europe, it’s the Asian buyers who own the US production under long term contract…
so i did a quick search, and found the press release on the 20 year contract on Calcasieu Pass gas held by Sinopec..
https://www.americanpress.com/2021/11/05/venture-globals-calcasieu-pass-facility-inks-lng-supply-contract/
so Venture Global is taking American natural gas out of our pipeline system at whatever they’ve contracted it for (probably less than the recent $5 price, and undoubtedly making a fat profit selling it to Sinopec, who then probably stands to triple their price selling it back in China….
but that’s not what they’re doing here; they’re selling the US gas (which they own under contract) right from our terminal at Calcasieu Pass in Louisiana and selling it directly to Europe at 7 or 8 times the Louisiana price of natural gas…
it goes without saying the Chinese would appreciate it if we built more gas pipelines for them..
rjs — thanks for the research.
Here’s one reason the LNG was available China’s Flirtation with “Let ‘Er Rip” Goes Hard Into Reverse with Shanghai Two-Phase Lockdown
£1.86 for a litre of diesel today.
SW London, U.K.
Curious about how £1.86/l relates to normal diesel prices for the UK (which were around £1.49/l before everything went south), I found this site:
https://www.globalpetrolprices.com/diesel_prices/
Looks like you all are in 10th place in the world now at $8.90/gal (for those of us not used to buying fuel by the liter). Sweden currently has the most expensive diesel at a whopping $10.27 per US gallon.
I have a feeling I’ll be tape-watching the data on this site…
The u.s. Elite have engineered a marvelous experiment to test and demonstrate in the present, some of the speculations for the future discussed at on the EnergySkeptic website: e.g. https://energyskeptic.com/2016/when-trucks-stop-running-so-does-civilization/ — I have not read this book but perhaps some other commenter has: “When Trucks Stop Running: Energy and the Future of Transportation”, 2016, by Alice J. Friedemann. I believe Friedemann describes and analyzes some of the impacts depleting fossil fuel resources will have on logistics networks, as presently structured. Some of those impacts will be ‘unpleasant’.
Jeremy — just ordered Alice’s book from Amazon — thanks for the link. Also GF Kennan’s lookback.
When I looked for the book on Amazon it showed a price of almost $50. From the reviews I read, it is only around 200-pages long. That is why I hoped someone already had a copy, had read it, and could comment on it. I hope you are not disappointed. The EnergySkeptic website has several postings over the last several years discussing some of its content.
I am not familiar with G.F. Kennan’s Lookback. What is it about?
Yeah Alice’s book was a bit pricey.
I was being irreverent — here’s George’s “lookback” At a Century’s Ending: Reflections, 1982-1995 It was his last policy book.
These worldwide yahoos are called “elites”? More like stupid as (family blog).
Good thing America has already implemented rationing – it’s called PRICE.
Bad thing me and the rest of the poors will get no diesel – it’s called BROKE.
Unfortunately, for a lot of us at the base of the pyramid, the next step will be STARVE.
The Arab Spring ‘revolts’ began as demonstrations against rises in the prices of food staples. This could become a huge ‘own goal’ for the Western Elites.
Bad thing the changes in diesel price and availability are step changes — and step changes can be unkind to fragile non-linear systems like the logistics networks.