Diesel Will Be A Top Energy Story in 2022 -- March 11, 2022

Updates

April 30, 2022: update.

March 14, 2022: update.

Original Post

Diesel: this is going to be one of the big energy stories of 2022.

• remember, Saudi just put in an order for multi-million bbls of diesel;
• now this: global diesel shortage raises risk of oil price spike, a repeat of conditions that led to record price in 2008; Reuters.
• pat on my back: I track the weekly EIA report and noticed the distillate fuel issue several weeks ago; pretty cool coming from someone who nothing about oil until the blog and input from readers;
• from Reuters:
• in 2008, similar situation helped propel oil prices to a record high;
• US: inventories are 21% below the pre-pandemic five-year average, and lowest level since 2005
• Europe: inventories are 8% below ... and lowest level since 2008;
• Singapore: inventories are 32% below ... and also lowest since 2008
• first question I would ask: why is Europe a relative outlier; this tells me the German economy is struggling;

Diesel, cont'd: loss of Russian crude will force European refiners to cut diesel output.

• reduction in output would coincide with tight diesel market
• Europe will need to pull crude supplies form further afield
• one-third of UK diesel imports come from Russia; no others come close.
  

Note: it could be worse. I have tags for both $16-diesel and $26-diesel.

$26/Gallon Transporation Fuel Vs Benefits For Active Duty

Back on July 19, 2012: US Navy to pay $26/gallon for transportation fuel.

The Los Angeles Times is reporting:

When the U.S. Navy sailed an imposing fleet near Hawaii that was powered in part by algae and used cooking grease, environmentalists weren't the only ones who were thrilled.

Executives at bioenergy startups in the San Francisco Bay Area, Chicago and elsewhere — and the venture capitalists backing them — had reason to cheer. The Obama administration has made the military, the largest consumer of energy in the country, a financial lifeline for cash-strapped alternative fuel innovators.

But the pilot voyage of the Navy's "great green fleet" came with a troubling aspect: price.

The fleet's green fuel costs $26 a gallon, several times more than conventional diesel and jet fuel. And the costly experiment came just as the military moved into an era of deep budget cuts.

Republicans in Congress have howled over the price tag, and they're not alone. Some independent energy experts doubt the military's projections that spending on pioneering technology will yield sufficient benefits.

And, of course, earlier this morning, from The Wall Street Journal, I posted that the military is ready to cut benefits for those on active duty because of cost:

Military eyes cuts for military benefits.

Off the table for now are changes in the retirement system. Because the military hopes to allow current service members to keep their existing retirement plans, it will be two decades until any savings from changes in military retirement are realized, making shifts in the program less urgent. 

Wow, what a bunch of hypocrisy. It's not benefits for active duty that need to be cut. The general officers who approved the plan to contract for $26/gallon of transportation fuel (vs $3.00/diesel) need to be cut/retired. Or court martialed. 

After Solar, The Next Industry to Bite the Dust

Simply look at the list of companies here and then compare their business plans / strategies with the solar companies that the President backed. For newbies, this refers back to the US Navy spending $26/gallon of diesel to prove that biofuels "work."