Pages

Tuesday, June 20, 2023

Booming Economy -- US Refiners Can't Keep Up With Diesel Demand -- June 20, 2023

Locator: 44981ECON. 

A reader noted that in his area of the country -- farm county -- diesel was now slightly less expensive than gasoline. 

Same in north Texas, thought it fluctuates a bit, some days, diesel is less expensive and some days gasoline is less expensive. 

[National data provided by the EIA still has diesel more expensive than gasoline. When one sees diesel prices lower than gasoline prices as a variant from the national EIA data, it's more about local conditions than anything else. It's an interesting data point -- a data point I often post -- but as a snapshot doesn't mean much. 

The bigger story, of course, is that natural gas, with a $2-handle is at all time lows and the cost of electricity this afternoon in Texas is forecast to soar from $20 / MW to $2,500 / MW and no one talks about that (except me). Texas electricity should be trending toward $0.00.

But I digress.

Back to diesel.

My quick-not-ready-for-prime-time reply:

It's all about the "right" kind of oil.

Refiners are working at max capacity.  Despite max capacity (94% this past week), the US refiners can't keep up -- even at max capacity and excess light oil, we're paying over $3/gallon for gasoline.

The US produces "excess" light oil (gasoline) and ships it overseas.
The US produces not enough heavy oil (diesel) and has to import it from overseas.

Last discussed on the blog just a few days ago -- RBN Energy:

RBN Energy: the race to build Texas's first offshore crude oil export terminal.

As we see it, 2023 will be another strong year for U.S. crude oil exports, driven in large part by rising domestic production. Upstream companies in the Permian and other U.S. shale plays are gradually ramping up their output and, with domestic refineries largely maxed out on how much light-sweet oil they can use, it’s safe to say that the vast majority of the incremental oil produced will end up at export terminals along the Gulf Coast.

And if production continues growing (as we expect), there’s likely to be room — and a strong economic rationale — for one or more new offshore terminals to be built in the deep waters of the Gulf itself.

Each of these proposed facilities would offer shippers what they want most: easy access to large volumes of oil and the ability to fully load 2-MMbbl VLCCs without any reverse lightering, which brings cheaper and cleaner export options to the market.

In addition, corroborated by remarks from most recent edition of "Focus On Fracking." Link here. It's a booming economy.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.