U.S. East Coast Diesel Supply Is Running on Fumes
May 5, 2022 3:04:01 GMT -5
Post by ExquisiteGerbil on May 5, 2022 3:04:01 GMT -5
U.S. East Coast Diesel Supply Is Running on Fumes
Analysis by Javier Blas | Bloomberg
Yesterday at 7:39 p.m. EDT
The horizon south of the Statue of Liberty is interrupted by the silhouettes of several oil-tank farms. New York harbor is the home of Wall Street and financial wizardry, but it’s also the place where old-school oil traders still buy and sell refined petroleum products the old way, by the gallon, setting benchmark prices. In the 1990s, Morgan Stanley’s Olav Refvik controlled so many of those tank farms that he was known as “the king of New York harbor.” If Refvik was still trading today, he would find his tanks nearly dry: Diesel, the harbor’s most basic fuel, is very scarce.
Last week, East coast inventories of diesel plunged to the lowest seasonal level since government records started more than 30 years ago. The shortage caused a crisis in the diesel market, sending wholesale and retail diesel prices to an all-time high. Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently.
Diesel is the workhorse of the global economy. It’s used everywhere to keep trucks, tractors, freight trains and factories moving. And its ubiquity means the increase in its price will exacerbate global inflationary pressures.From central bank interest rates to supermarket prices, a lot hinges on diesel. On Tuesday, average U.S. retail diesel prices posted the fifth-consecutive fresh daily record, surging above $5.3 per gallon, up nearly 75% from a year ago. The price spike is worse on the Eastern seaboard, where diesel retails now for more than $6 per gallon, nearly double 2021’s price.The oil tanks in New York harbor are nearly empty for reasons both global and local. Around the world, diesel is in short supply as demand has surged well above pre-Covid levels, spurred by a boom in freight. The Russian invasion of Ukraine has tightened flows further, as Washington has banned imports of Russian petroleum. At the same time, the U.S. has become the barrel provider of last resort for many Latin American countries, with exports of gasoline, diesel and jet-fuel running at unusually high levels. But there’s a local problem too: East coast refining capacity has plunged over the last decade, leaving the region vulnerable to squeezes.In the past 15 years, the number of refineries on the U.S. East coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.
Continued at link
Analysis by Javier Blas | Bloomberg
Yesterday at 7:39 p.m. EDT
The horizon south of the Statue of Liberty is interrupted by the silhouettes of several oil-tank farms. New York harbor is the home of Wall Street and financial wizardry, but it’s also the place where old-school oil traders still buy and sell refined petroleum products the old way, by the gallon, setting benchmark prices. In the 1990s, Morgan Stanley’s Olav Refvik controlled so many of those tank farms that he was known as “the king of New York harbor.” If Refvik was still trading today, he would find his tanks nearly dry: Diesel, the harbor’s most basic fuel, is very scarce.
Last week, East coast inventories of diesel plunged to the lowest seasonal level since government records started more than 30 years ago. The shortage caused a crisis in the diesel market, sending wholesale and retail diesel prices to an all-time high. Diesel is today more expensive in America that it was in 2008, when the price of crude oil surged to nearly $150 a barrel compared with little more than $100 currently.
Diesel is the workhorse of the global economy. It’s used everywhere to keep trucks, tractors, freight trains and factories moving. And its ubiquity means the increase in its price will exacerbate global inflationary pressures.From central bank interest rates to supermarket prices, a lot hinges on diesel. On Tuesday, average U.S. retail diesel prices posted the fifth-consecutive fresh daily record, surging above $5.3 per gallon, up nearly 75% from a year ago. The price spike is worse on the Eastern seaboard, where diesel retails now for more than $6 per gallon, nearly double 2021’s price.The oil tanks in New York harbor are nearly empty for reasons both global and local. Around the world, diesel is in short supply as demand has surged well above pre-Covid levels, spurred by a boom in freight. The Russian invasion of Ukraine has tightened flows further, as Washington has banned imports of Russian petroleum. At the same time, the U.S. has become the barrel provider of last resort for many Latin American countries, with exports of gasoline, diesel and jet-fuel running at unusually high levels. But there’s a local problem too: East coast refining capacity has plunged over the last decade, leaving the region vulnerable to squeezes.In the past 15 years, the number of refineries on the U.S. East coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.
Continued at link